[Click eStock] "LG Electronics, Earnings Improvement Expected from Second Half of Next Year"

[Asia Economy Reporter Lee Jung-yoon] Korea Investment & Securities maintained a buy rating and a target price of 120,000 KRW for LG Electronics on the 28th, stating that the TV and home appliance market conditions are expected to bottom out and improve from the second half of 2023.

LG Electronics' estimated Q4 performance this year is expected to fall short of consensus estimates, with consolidated sales of 22.4 trillion KRW and operating profit of 288.1 billion KRW. The performance of LG Innotek, a consolidated subsidiary, was also sluggish, and LG Electronics' performance excluding LG Innotek in the consolidated results is analyzed to fall short of initial expectations due to inventory adjustments by retailers. The main business divisions?Home Appliance (H&A), TV (HE), and B2B (BS)?all recorded operating losses, while only the automotive components (VS) division is estimated to have continued profitability.

According to the National Retail Federation (NRF), the number of online and offline shoppers during this year’s Thanksgiving holiday reached 100.97 million, marking a record high. Researcher Cho Cheol-hee of Korea Investment & Securities explained, "Offline sales were average, but online sales were active," adding, "Major retailers increased discount rates to aggressively clear inventory. According to Adobe, the average discount rate for retailers during Black Friday was 30%, surpassing last year’s 28%." As the Consumer Price Index (CPI) inflation rate has been declining since the third quarter, consumption sentiment is expected to improve mainly in developed countries in the second half of next year, leading to an improvement in the traditional consumer goods sector.

Researcher Cho said, "The VS division has stably turned to operating profit, and the TV and home appliance market, which is most important to the company’s performance, is expected to bottom out and start improving from the second half of 2023," adding, "With the decline in ocean freight rates, transportation cost burdens will also decrease next year."

This content was produced with the assistance of AI translation services.