[Click eStock] "LG Electronics, Operating Profit Upward Revision for This Year and Next"…Target Price Raised

Hana Securities raised its operating profit forecasts for LG Electronics by 23% for this year and 17% for next year, maintaining a buy rating and increasing the target price from KRW 139,000 to KRW 168,000 on the 10th.

LG Electronics reported consolidated sales of KRW 20.4718 trillion and operating profit of KRW 1.4974 trillion for the first quarter of this year. It is judged that all business divisions on a separate basis, excluding LG Innotek, showed better-than-expected strong performance.

The Home Appliance & Air Solution (H&A) division is estimated to have increased sales compared to the same period last year despite weak demand, with an operating profit margin reaching 12.5%. With a solid market position centered on premium products, it demonstrated resilient performance even during the downturn. The TV Business (HE) division showed steady profitability despite a decrease in sales compared to the same period last year, due to a decline in raw material prices including LCD panel prices, which aligns with the strong performance of the Business Solutions (BS) division. The Vehicle Components (VS) division’s sales increased sharply by 26.3% year-on-year, showing rapid top-line growth.

On a separate basis, LG Electronics’ sales for this year are expected to decrease by 1.6% to KRW 63.7019 trillion, but operating profit is forecasted to increase by 58% to KRW 3.6671 trillion. This exceeds the previous record operating profit of KRW 3.2959 trillion set in 2020.

Kim Rok-ho, a researcher at Hana Securities, explained, "While 2020 benefited from the COVID-19 pandemic, this year’s achievement of maximum profit despite overall weak demand is particularly meaningful. The performance overcoming industry difficulties through market competitiveness in the premium segment and proactive inventory management last year should be valued more highly."

He added, "LG Electronics is expected to maximize the cost reduction effect from decreased transportation expenses through solid sales, renewing its record-high operating profit. Since this performance overcame overall weak demand independently rather than riding on favorable industry conditions, it justifies a valuation premium."

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