Hana Securities on the 14th said that for LG(003550), the earnings uptrend led by its electronics affiliates is continuing while momentum in the robotics business is also carrying on. It maintained a "buy" recommendation and raised the target price 12% to 140,000 won from 125,000 won. The previous trading day's closing price was 113,700 won.
Choi Jung-uk, an analyst at Hana Securities, said, "On a consolidation basis, LG's second-quarter revenue and operating profit this year were 2 trillion won and 533 billion won, up 19% and 92.5%, respectively, from a year earlier," and noted, "As the earnings improvement trend at key electronics affiliates continues, we raised the target price to partially reflect the potential for equity value gains going forward."
Choi cited improved results at major affiliates in the group as the driver of strong second-quarter earnings. LG Electronics, helped by a higher share of premium appliances, growth in its vehicle components business, and one-off gains from a tariff refund, posted operating profit of 1.6 trillion won, up 147%. LG Innotek saw operating profit surge more than 2,000% year over year on demand for camera modules and increased supply of semiconductor substrates for artificial intelligence (AI) servers.
LG Chem also logged a 25.8% increase in operating profit on improved petrochemical spreads and a swing to profit at its advanced materials unit and LG Energy Solution. At LG CNS, topline growth centered on AI, cloud, and data centers continued, but operating profit fell 9.2% due to upfront investments in future growth industries such as physical AI and delays in project contract decisions.
Choi said, "Overall, the three electronics affiliates in the group delivered solid results that beat market expectations, and the outlook for the second half is also very positive."
On the stock side, analysts say momentum in AI and robotics and attractive valuation are both coming to the fore. The share price, which had jumped in June on expectations of cooperation with Nvidia but then fell on the lack of a concrete plan, now looks more attractive after the pullback.
Choi added, "With Chairman Koo Kwang-mo known to be set to meet Nvidia CEO Jensen Huang in Silicon Valley to sign a strategic partnership, whether there is an announcement of concrete cooperation plans and whether business results are fleshed out are of paramount interest to the market," and explained, "LG Group has a well-rounded AI value chain—including data center cooling and robots (LG Electronics), sensing components (LG Innotek), AIDC and platforms (LG CNS and LG Uplus), and power solutions (LG Energy Solution)—so expectations could resurface."
He added, "Even if robot momentum does not materialize immediately in the short term, additional share price gains can be reasonably expected on the affiliates' earnings improvements alone."