Hana Securities on the 14th said LG Electronics will improve profitability after restructuring and secure growth drivers as it pushes its new Robotics business. It maintained a "buy" recommendation and raised the target price to 230,000 won from 160,000 won. LG Electronics' previous closing price was 191,400 won.
In the first quarter this year, LG Electronics posted consolidation revenue of 23.7 trillion won and operating profit of 1.6737 trillion won. Revenue rose 4% year over year, and operating profit increased 35%.
Hana Securities assessed that LG Electronics is securing earnings strength despite an unfavorable business environment through cost structure improvements and marketing expense efficiencies. It projected the company will also focus on securing growth drivers as it aggressively pushes Robotics-related new businesses.
Kim Min-gyeong, a Hana Securities researcher, said, "LG Electronics at its shareholders' meeting on Mar. the announced plans to build a mass-production system for humanoid robot actuators within the year and to conduct a proof of concept (PoC) for a cloid robot next year," adding, "Judging by the fact that it moved up the PoC plan to the first half of this year, it appears to be actively accelerating its robot business."
Kim added, "New orders for the data center cooling business are rising sharply," and "We cannot rule out momentum from the full-fledged launch of AI-related businesses, including discussions on collaborations with Nvidia, physical AI, AI data centers, and mobility."
Kim projected that this year LG Electronics will post consolidation revenue of 94.3311 trillion won and operating profit of 3.8 trillion won. Although demand recovery is limited as internal and external uncertainties persist, a turnaround to profit in the MS institutional sector is expected through fixed-cost reductions from restructuring and price hikes. In the second half of this year, a one-off gain from tariff refunds is expected to be reflected in results.
Kim said, "With earnings strength greatly improved through intensive expense cuts, the full-fledged launch of new businesses, such as building a mass-production line for robot actuators, will act as momentum," adding, "Certification procedures for key products for data centers, such as chillers and cooling distribution units (CDU), also appear to be proceeding smoothly."