MERITZ Securities evaluated on the 27th that LG Electronics would continue to experience poor performance until the second half of this year, but attention should be paid to the possibility of performance improvement after next year. Nevertheless, the target stock price remains at 100,000 won, and the investment opinion is maintained as 'buy.'
LG Electronics' consolidated sales for the second quarter are expected to be 21.0785 trillion won, with operating profit estimated at 704 billion won. This represents a decline of 2.8% and 41.2%, respectively, compared to the same period last year. The figures reflect the impact of tariffs in the first half, sluggish demand for home appliances due to economic downturn, rising LCD panel prices, and intensified competition in TV prices, which could lead to a shift into the red. Consolidated subsidiary LG Innotek is also expected to fall short of market expectations (consensus) due to exchange rate effects.
The deterioration in performance in the first half is expected to continue into the second half. However, analysts noted that the decline in profits for the second half has already been reflected in the stock price, and excluding the COVID-19 pandemic period, the stock price is at historically low levels, so attention should be paid to the potential for performance improvement after next year.
Yang Seung-soo, a researcher at MERITZ Securities, analyzed, "Due to LG Electronics' business structure, it cannot avoid the seasonal off-peak impact in the second half," and added, "This year, since the expense burden due to tariffs is compounded, a reduction is inevitable."
He further noted, "Next year, improvements in the portfolio due to solid growth in the HVAC market and the expansion of performance in home appliance subscription and web-based service businesses are expected," and added, "Operating profit on a separate basis is projected to increase by 26.3% to 2.9 trillion won."