April 23, 2024

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[THE INVESTOR] LG Electronics' shares have been rallying in recent weeks on market expectations of its upcoming flagship G6, which the firm hopes will serve as a savior of its money-bleeding smartphone business.

After bottoming out at 44,700 won (US$37.10), a record low over the past year, on Dec. 1, the stock has been on the upward trend. It closed at 54,300 won, up 5.43 percent, on Jan. 3.

The stocks of electronics firms including Samsung usually increase in January when they introduce their annual marquee products at the CES tech trade show in Las Vegas.

The companies’ stocks also gain momentum in January before they take the wraps off their flagship smartphones in February.

As Samsung, however, is expected to unveil the Galaxy S8 in March, a month later than usual due to the ongoing probe into the fire-prone Galaxy Note 7, LG will likely benefit from the absence of the Galaxy for a while in the high-end smartphone segment -- a factor that seems to have been reflected in LG’s recent stock rally.

LG is forecast to showcase its G6 during the Mobile World Congress in February in Barcelona, as usual, and to start selling the smartphone from March.

Market analysts have offered positive outlooks on LG’s smartphone business.

“LG’s mobile communications division will be able to post a significant turnaround,” said Kim Dong-won, an analyst from KB Securities, citing the lowered production cost of the G6, by more than 20 percent, compared to the preceding model thanks to reduced costs of components.

LG is expected to log an operating loss of 400 billion won in the fourth quarter in 2016. The company has posted an operating loss for the fifth consecutive quarter until the third quarter last year.

By Kim Young-won (wone0102@heraldcorp.corp)