[Click eStock] LG Electronics, Low Price Buying Timing Considering Seasonality in Q1 Next Year

Hyundai Motor Securities announced on the 23rd that it maintains a Buy rating and a target price of 140,000 KRW for LG Electronics. LG Electronics showed a differentiated stock price trend within the large IT sector, supported by improved earnings due to normalization of logistics costs and a decline in raw material prices up to the first quarter. However, the stock price has been significantly adjusted as the second-quarter earnings fell short of market expectations due to weakening demand for home appliances and TVs, as well as provisions for the GM Bolt EV recall. Objectively assessing the stock price trend, the rising momentum in the semiconductor sector driven by HBM demand was another reason for the company's stock weakness. No Geun-chang, Head of the Research Center at Hyundai Motor Securities, stated, "We believe the current stock price fully reflects concerns about earnings slowdown in the second half of the year," adding, "Rather, at the current stock price level, a bottom-fishing strategy considering seasonality in the first quarter of next year may also be effective."

LG Electronics' consolidated sales for the third quarter, including LG Innotek, are expected to decrease by 3.7% to 20.4 trillion KRW, but operating profit is expected to increase by 15.9% to 865 billion KRW, supported by a turnaround to profitability in the HE division. Although the volatility of profits is not as high as in the semiconductor sector, the growth of business units excluding LG Innotek remains moderate, which often leads to being overlooked within the IT sector, which is characterized by momentum investing.

No, the Research Center Head, explained, "Sales excluding LG Innotek are expected to grow by 1.2% to 65.5 trillion KRW this year, but the VS division has been experiencing over 25% growth in scale since 2022," adding, "Of course, since the profitability of the VS division is still minimal, the steep growth has not yet translated into a stock price revaluation, but in the mid to long term, whether the VS division improves profitability will be important."

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