[Edaily Reporter kyoungeun kim ] Forecasts suggest that LGELECTRONICS(066570)will report third-quarter earnings that fall short of market expectations. However, analysts note that a revaluation of the company’s stock is possible as the outlook for new businesses—such as AI data center cooling solutions and robotics—becomes increasingly clear.

The firm maintained its “Buy” investment rating and raised the target price from 220,000 won to 250,000 won.

Yang Seung-soo, an analyst at Meritz Securities, stated in a report on the 6th, “The weak consolidated earnings will be largely driven by the slowdown in third-quarter performance at the subsidiary LG Innotek(011070),” adding, “On a standalone basis, operating profit is also expected to come in slightly below the market consensus at 728.1 billion won, reflecting one-time costs related to voluntary retirement.”

He estimated LGELECTRONICS’ third-quarter consolidated revenue at 24.1958 trillion won, a 10.6% increase year-over-year, and operating profit at 881.7 billion won, up 28.0%. The operating profit figure falls 15.9% short of the market consensus (1.0479 trillion won).

He cited cooling solutions for AI data centers (DCs) and robotics as key factors affecting the stock price. Analyst Yang noted, “LGELECTRONICS’ stock price this year is being driven by expectations for these two growth pillars,” adding, “As the growth visibility of these two businesses increases, the potential for further stock price appreciation due to a valuation re-rating will expand.”

In particular, the AI data center cooling business is expected to rapidly demonstrate tangible results by securing an order backlog of approximately 3 trillion won by the end of the year. Unlike the Vehicle Components (VS) division, where revenue is recognized 2–3 years after an order is secured, revenue recognition is possible within 7–9 months of securing an order; therefore, the firm anticipates that starting next year, the conversion of existing order backlog into revenue and the expansion of new orders will occur simultaneously.

The company has also sequentially obtained certifications for its liquid-cooled cooling water distribution units (CDUs), starting with the 600-kilowatt (kW) class, followed by the 1-megawatt (MW) and 2.5-MW classes, and is currently in the process of obtaining certification for the 4-MW class. Researcher Yang predicted, “Since major competitors have not yet secured 4-megawatt-class certification, obtaining this certification will strengthen our competitiveness in the high-capacity CDU market and drive additional orders.”

Commercialization of Robotics will begin in earnest next year. Currently, approximately 200 Cloid robots are being deployed at the Yangjae Data Factory to learn and validate non-routine and repetitive tasks on the production line; based on this, the company plans to roll them out sequentially to its U.S. production sites starting next year. The actuators currently being tested on the company’s robots are expected to go on sale to external customers in earnest starting early next year.

As grounds for raising the fair value target, he cited past instances of the stock trading at a premium. Analyst Yang explained, “In the second half of 2020 through the first half of 2021, when the recovery in core business profitability and momentum surrounding the Apple Car were highlighted simultaneously, the stock traded at a 12.5% premium to the KOSPI average,” adding, “Given that new business ventures—which offer higher visibility for earnings contributions than the Apple Car—are taking shape, a premium valuation remains justified at this point.”