KB Securities noted on the 31st that there is a need for reduced performance volatility for LG Electronics, adjusting the target stock price down by 7.7% from the previous 130,000 won to 120,000 won, and suggested an investment opinion of 'buy.' The closing price for LG Electronics on the previous trading day was 83,500 won.
KB Securities forecasted that despite the global slowdown in consumer electronics demand and increased logistics cost volatility, it will be able to generate a healthy operating profit of approximately 2.1 trillion won through increased shipments of volume zone products in the home appliance (H&A) sector.
The TV (HE) sector is seeing a delay in profitability improvement due to increased marketing expenses resulting from intensified competition and cost structure burdens from rising panel prices. The automotive parts (VS) and business solutions (BS) sectors are expected to face declining profitability amid a slowdown in electric vehicle parts sales, weak global PC demand, and delays in the improvement of new business performance.
Kim Dong-won, a researcher at KB Securities, said, 'In the case of LG Innotek, the new suppliers' market share for camera modules is expanding in the context of weak global smartphone demand, leading to intensified price competition, and thus poor performance is projected.'
KB Securities estimated that LG Electronics' fourth-quarter consolidated revenue will decrease by 2.6% year-on-year to 22.5 trillion won, and operating profit is projected to drop by 29.8% year-on-year to 2.196 billion won. Excluding LG Innotek's operating profit of 2.945 billion won, standalone performance is expected to show an operating loss of 749 million won.
Researcher Kim noted that the poor performance is due to 'the home appliance business profits rapidly declining as it enters the off-season, alongside the expectation that the TV and business solutions sectors will record losses due to increased year-end marketing expenses and slowing demand.'
Researcher Kim remarked, 'While the stock price of LG Electronics is expected to show downward rigidity due to increased valuation appeal, value-up policies, and the pursuit of initial public offerings (IPOs) in India, meaningful rebounds will require a reduction in the volatility of performance characterized by a high-low pattern and improvements in the performance of related companies.'