April 26, 2024

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[THE INVESTOR] LG Electronics’ profitability will be hurt by growing marketing costs, said Hana Financial Investment on July 9, lowering the target price to 129,000 won (US$115.72) from 143,000 won. 

Its second-quarter earnings were below market consensus, with 15.02 trillion won revenue and 771 billion won operating profit, burdened by increase in marketing costs for its flagship G7 model as well as a new television and World Cup campaign, said analyst Kim Rok-ho. 

Although costs are a seasonal factor, low revenue is a matter of concern, said the analyst adding that sales of TV or home electronics may have been slower than expected. 

Its third-quarter earnings will stabilize and revenue will reach 15.50 trillion won with operating profit of 795.6 billion won, estimated Kim.

Its current stock price has declined excessively from uncertainties over LG Display and group affiliates rather than its slow earnings, said the analyst maintaining a “buy” recommendation. 

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