DAISHIN SECURITIES said on the 2nd that for LG Electronics, operating profit in the third quarter of this year is estimated to be better than feared, and if the India subsidiary lists, the parent company LG Electronics' corporate value is highly likely to be revised upward. It maintained a Buy investment rating and a target price of 105,000 won, and suggested overweight. LG Electronics' previous day's closing price was 75,100 won.
DAISHIN SECURITIES said it views October for LG Electronics, from an investment perspective, as a period of new change and corporate value expansion. It explained that while the IT sector delivered a stronger-than-expected rebound in September and additional rebound momentum this month is expected to weaken, LG Electronics is expected to see a relatively stronger share-price rise.
First, it estimated that third-quarter results this year will be better than feared. DAISHIN SECURITIES projected on a consolidation basis for LG Electronics sales of 21.5 trillion won and operating profit of 595.5 billion won. On a separate basis, operating profit was expected at 423.3 billion won.
Researcher Park Kang-ho of DAISHIN SECURITIES explained, "Although it slightly misses the consensus (market forecast) and previous estimates, if you reflect workforce efficiency costs in the MS business, including TVs, it is highly likely to effectively beat the consensus."
It also analyzed that, although there were concerns that U.S. tariffs on home appliances could lead to a slowdown in third-quarter sales and worsen profitability, the actual impact was minimal.
Park explained, "In response to the impact of U.S. tariff implementation, proactive strategies such as expanding the production share in the United States and Mexico and some preemptive inventory buildup proved effective."
In addition, the India subsidiary's listing is scheduled for the 14th, and it analyzed that, as a result, the parent company LG Electronics' corporate value is highly likely to be revised upward compared with before. Park projected that with the listing of the India subsidiary and the sale of a 15% equity stake, roughly 1.74 trillion–1.84 trillion won in cash inflows is expected.
It is also positive that the operating margin of the VS (vehicle components) institutional sector in the third-quarter results is expected to beat expectations. Park explained, "Even reflecting only the competitiveness value of the VS, robot, and humanoid businesses, the current share price appears undervalued."