April 25, 2024

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[THE INVESTOR] LG Electronics’ TV sector will be hurt by unfavorable currency exchange rates, said Hyundai Motor Investment and Securities on July 3, lowering the target price to 115,000 won (US$102.50) from 143,000 won.

A strong dollar and weak currencies of emerging countries have pushed its costs in the sector while revenue failed to catch up, and the operating margin of its home entertainment division in the second quarter will decline to 10.3 percent from 11.7 percent, said analyst No Geun-chang.

Losses from the mobile communications department will expand from slow sales of the G7 model, and profits from the B2B sector will decline due to struggling solar business said the analyst, lowering the second-quarter operating profit prospect down 15.3 percent to 818.8 billion won.

As for the concerns over the possibility that its subsidiary LG Display’s swelling losses could hurt LG Electronics’ display module purchases, considering the positive effect of OLED TVs, the uncertainties are marginal, said No. 

The declining profitability of televisions is due to the unfavorable currency exchange rate, but also is part of the process of normalizing abnormally high margins, he added.

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