[Click e-Stock] "LG Electronics to Expand Presence in Robotics Market... Target Price Up"

1Q Expected to Exceed Consensus on Strong HS Performance

MS Division Also Forecast to Narrow Losses

On April 1, DS Investment & Securities raised its target price for LG Electronics to 170,000 won and maintained its "Buy" investment rating.

Daehyung Cho, an analyst at DS Investment & Securities, stated in a report released that day that, "Although concerns remain due to the ongoing war, we believe LG Electronics can respond through swing production. As profit growth is expected across all business divisions this year, downside risk appears to be limited."

He first projected that LG Electronics will expand its presence in both the industrial and home robotics markets, starting with its actuator business in 2027. Cho explained, "The key component of actuators is the motor, and LG Electronics is already conducting B2B sales of this component. The company also has extensive design experience with sensors and control technologies, so it is expected to play a role as a solution provider for customers requiring actuators in the future."

Expectations also extended to the robotics and data center sectors. Cho noted, "The household robot, 'Cloyd,' is expected to enter the Proof of Concept (POC) phase in 2027, with a potential product launch as early as the end of 2028. By setting a price point based on 'affordability for buyers,' the product could achieve a faster-than-expected penetration rate." He added, "In the area of AI data center cooling, LG Electronics is expanding its product portfolio to include liquid cooling, enabling it to offer integrated solutions combining air and liquid cooling. It is also understood to be undergoing global big tech certification processes."

Cho also forecast robust earnings performance. For the first quarter of this year, he projected consolidated revenue of 23.8609 trillion won and operating profit of 1.4326 trillion won, exceeding the market consensus of 1.3755 trillion won, driven by strong results in the Home Solutions (HS) division. He also noted that while the MS division posted an operating loss of 750 billion won last year, this loss is expected to decrease significantly this year. "We estimate that the MS division will reduce its operating loss to around 600 billion won, due to cost reductions from low-cost component sourcing at the procurement stage and improved profitability following last year's voluntary retirement program," Cho explained.

Regarding the MS business, he said, "PC sales account for about 5% of total revenue, so concerns about the negative impact of rising memory prices on the MS division’s profitability are limited. Attention should rather be paid to business units that could serve as grounds for a re-rating, rather than to these concerns."

Cho further emphasized, "The VS division is steadily strengthening its profit base. Along with the HS division, it is expected to serve as a stable cash cow, while the profitability contributions from the ES division and new businesses are also increasing, providing ample grounds for a re-rating."

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