[Click eStock] "LG Electronics, Q2 Earnings Exceed Expectations... Target Price Up"

Target Price Raised by 6.7% Compared to Previous Level

On the 12th, KB Securities raised the target price for LG Electronics from 150,000 KRW to 160,000 KRW, anticipating that the company's second-quarter earnings this year will exceed expectations and that future earnings upgrades will occur. The investment rating was maintained as 'Buy.'

Dongwon Kim, a researcher at KB Securities, explained, "The upward revision of the target price is due to the expectation that the B2B (business-to-business) segment, which can generate a stable double-digit operating profit margin, will account for 40% of total home appliances (H&A) sales and one-third of annual home appliance operating profit, leading to anticipated earnings upgrades." He added, "Accordingly, we have raised our estimates for controlling shareholder net profit to 2.5 trillion KRW in 2024 and 3.5 trillion KRW in 2025, representing increases of 3.4% and 9.3%, respectively, compared to previous forecasts."

The second-quarter earnings are expected to surpass expectations. Researcher Kim stated, "LG Electronics is projected to achieve record-high earnings for the second quarter, driven by strong performance in the home appliance and automotive components businesses." He continued, "The consolidated operating profit for the second quarter is estimated at 1.2 trillion KRW, a 59% increase year-on-year (with LG Innotek's second-quarter operating profit at 108.8 billion KRW), which is expected to exceed the consensus estimate (average securities firm forecast) of 961.9 billion KRW by 23%."

Sales expansion is anticipated through the supply of artificial intelligence (AI) cooling systems. Recently, LG Electronics successfully supplied its AI data center cooling system to a major North American big tech company for the first time. Researcher Kim noted, "LG Electronics' AI cooling system offers high energy efficiency, reducing cooling power costs and enabling data center operational cost savings. It is equipped with eco-friendly components (high-efficiency compressors, heat pumps) and catalysts (R32, R290), aligning with environmental energy policies in North America and Europe." He added, "Based on North American references, LG Electronics is expected to expand its supply, leading to high sales growth." The North American data center market (5,350 facilities) accounts for 45% of the global data center market (11,800 facilities), and the global data center cooling market size is expected to grow from 18 trillion KRW in 2023 to 38 trillion KRW in 2030, doubling in seven years. Researcher Kim said, "From next year, LG Electronics' AI data center cooling system sales are expected to account for 20% of HVAC (heating, ventilation, and air conditioning) sales, making trillion-KRW-level sales achievable."

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