[Click eStock] "LG Electronics, Reduced Tariff Burden... Forecasting Best Performance Since 2021"

Target Price Maintained at 130,000 KRW
'Buy' Rating Reaffirmed Amid Easing Tariff and Logistics Concerns

On the 26th, KB Securities maintained its target price of 130,000 KRW for LG Electronics, stating that concerns over the volatility of US tariffs and logistics costs are easing. The investment rating was also maintained as 'Buy.'

Dongwon Kim, a researcher at KB Securities, explained, "LG Electronics recently completed the expansion and production line rearrangement of its Tennessee plant in the US," adding, "As a result, even if the US imposes reciprocal tariffs starting in April, refrigerators and ovens previously produced in Mexico can be manufactured at the Tennessee plant, reducing tariff burdens."

He also noted, "Logistics costs, which increased by more than 400 billion KRW last year, are expected to decrease by over 600 billion KRW this year due to an oversupply of shipping capacity," adding, "Accordingly, operating profit this year is expected to increase by 20% year-on-year to 4.1 trillion KRW, marking the highest performance since 2021."

KB Securities expects LG Electronics' first-quarter earnings to exceed market expectations. Sales and operating profit for the first quarter of this year are estimated at 22.4 trillion KRW and 1.4 trillion KRW, respectively, representing increases of 5% and 3% year-on-year. The operating profit figure is 11% above market consensus.

Researcher Kim analyzed, "Premium home appliance sales are rapidly increasing in emerging Asian markets such as India, Indonesia, and Malaysia, and the HVAC (heating, ventilation, and air conditioning) business is significantly improving due to increased sales of data center cooling systems (chillers)." Accordingly, LG Electronics' B2B (business-to-business) sales ratio is expected to expand from 35% in 2024 to 50% by 2030.

Expansion of cooperation with Microsoft (MS) is also anticipated. MS plans to increase adoption of LG Electronics' cooling systems for AI data centers and expand joint development of AI agents. Researcher Kim stated, "AI agents are expected to be adopted 80-100% across all global industries by 2026," explaining, "MS is collaborating with LG Electronics to develop technologies that utilize AI agents in various spaces such as automobiles, PCs, mobile devices, homes, offices, and airports."

Recently, MS completed the final quality certification of LG Electronics' data center chillers and liquid cooling systems. As a result, order volumes are expected to increase significantly in the future.

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