May 09, 2024

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[THE INVESTOR] LG Electronics’ operating profit in the first quarter will hike 55 percent on-year to 781.1 billion won (US$696.48 million), the highest in eight years, forecast KB Investment and Securities on March 22, raising the target price to 95,000 won from 85,000 won. 

It widely beats market expectations and in the second quarter the upturn will continue, as the volume of better priced smartphones in Latin America and Middle East will increase. The decent sales of G6 will also shrink the loss of its mobile communications division, and the rising sales of premium home appliances will boost the operating margin, said analyst Kim Dong-won. “The smartphone division will turn to black next year with 304.8 billion won operating profit, removing the factor for devaluation.”

The vehicle component division will turn to black in the fourth quarter and post 210 billion won operating profit next year, pushing the stock value up, said the analyst. 

General Motors’ electric vehicle is selling faster than expected, and the demand for parts, supplied by LG, is spiking. The orders from finished car makers in China, Germany and North America too are building up fast, noted Kim, estimating that the order backlog will reach 30 trillion won by the end of this year and revenue will surge at an average of 32 percent every year by 2020.

By Hwang You-mee (glamazon@heraldcorp.com)