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Daishin Securities. (Photo = Yonhap News) |
[Alpha Biz= Kim Sangjin] Daishin Securities stated on Friday that LG Electronics' first quarter is typically the strongest in terms of operating profit and expressed expectations for a potential rise in the stock price. While maintaining a "Buy" recommendation, the firm lowered its target price by 3.8% to KRW 125,000. LG Electronics' closing price on the previous trading day was KRW 85,700.
Daishin projected LG Electronics’ consolidated revenue and operating profit for Q4 2023 at KRW 22.3 trillion and KRW 260.7 billion, respectively, reflecting year-on-year declines of 1.7% and 16.6%. It also anticipated that Q4 operating profit would fall short of market consensus.
The weaker profitability was attributed to several factors. According to Daishin, the HE (TV) division faced intensified competition during the peak season, leading to higher marketing expenses. Additionally, a decline in electric vehicle demand affected the VS (vehicle components) division, slowing sales growth and lowering profitability. Daishin also revised its estimates for LG Innotek, a consolidated subsidiary, downward. LG Electronics' standalone operating loss was estimated at KRW 24.8 billion.
On a brighter note, Daishin estimated H&A (home appliances) sales for Q4 at KRW 6.96 trillion, a 4.1% increase year-on-year. For 2024, the firm projected H&A sales to rise by 8.5% year-on-year to KRW 32.7 trillion, which would mark record-high performance. However, the VS and PC (BS) divisions are expected to report weak results due to delayed economic recovery and declining electric vehicle demand.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
