Daishin Securities evaluated LG Electronics on the 27th, noting that "the first quarter is the time when operating profit is largest during the quarter," and expressed expectations for a rise in stock prices. The investment opinion remains 'buy,' but the target price was lowered by 3.8% to 125,000 won. LG Electronics' closing price on the previous trading day was 85,700 won.
Daishin Securities projected that LG Electronics' consolidated revenue and operating profit for the 4th quarter will decrease by 1.7% and 16.6% year-over-year, respectively, to 22.3 trillion won and 260.7 billion won. The operating profit for the 4th quarter is expected to fall short of the consensus.
Park Kang-ho, a researcher at Daishin Securities, identified the reasons for the underperformance in profitability relative to revenue, stating that "the HE (TV) institutional sector faced increased competition during the peak season, leading to higher marketing expenses, and demand for electric vehicles weakened, resulting in slower revenue in the VS (Vehicle Components) institutional sector focused on electric vehicle parts, causing profitability to decline," and added that "the estimates for the consolidated LG Innotek were also lowered." The standalone operating loss for LG Electronics was estimated at 24.8 billion won.
Revenue from the Home Appliances (H&A) segment in the 4th quarter was estimated to increase by 4.1% year-over-year to 6.96 trillion won. The revenue for Home Appliances (H&A) in 2024 was projected to rise by 8.5% year-over-year to 32.7 trillion won, expected to be a record high. In contrast, the VS and PC (BS) segments are anticipated to report poor performance due to delayed economic recovery and weakened demand for electric vehicles.
Research Institute Park stated that "the decline in profit margins centered around the HE, VS, and BS institutional sectors was due to weakened global demand and intensified competition," adding that "considering the repetitive expense reflection in the 4th quarter, we evaluate it as within the expected range."
He emphasized, "Now we need to expand profit momentum in the first quarter of 2025. A strategy focused on changes in the portfolio, such as subscription-based appliances and business-to-business (B2B), is necessary," noting that "the price-to-book ratio (PBR) for 2025 is set at 0.7 times and the price-to-earnings ratio (PER) at 6.6 times, indicating undervaluation, and since the first quarter is a time of high operating profit, we expect stock price increases."