[Edaily Reporter Kwon Oh Seok ] DB Securities announced on the 8th that it is maintaining its “Buy” rating on LGELECTRONICS(066570)and raising its target price from 245,000 won to 265,000 won.

Jo Hyun-ji, an analyst at DB Securities, stated, “LGELECTRONICS’ third-quarter consolidated operating profit of 781.8 billion won (up 13.5% year-over-year) fell significantly short of the consensus estimate (1.0301 trillion won). However, standalone operating profit, excluding LG Innotek, is estimated at 701.2 billion won (+46.2%), which is likely to have generally met expectations (720 billion won)," adding, "It is important to note that the company has now recorded significant year-over-year profit growth for three consecutive quarters."
By business division, the firm identified several factors weighing on performance: for HS (Home Appliances), increased logistics costs; for VS (Vehicle Components), quarterly revenue recognition fluctuations due to the nature of new orders; and for ES (Heating, Ventilation, and Air Conditioning), domestic air conditioner sales falling short of expectations due to a sluggish domestic construction market.
He explained, “At the company-wide level, the impact of exchange rates on profit and loss is limited due to a high natural hedge ratio, though the strong won likely had some impact on revenue.” He added, “However, we believe that robust sales of premium products and marketing efficiency improvements largely offset these negative effects. The MS (Media & Entertainment) division has entered a stable profit trend, driven in part by the effects of last year’s workforce restructuring.”
Of course, following the announcement of earnings that fell significantly short of the consensus estimate on a consolidated basis, the stock price closed down 10%. Nevertheless, since the shortfall in LGELECTRONICS’ standalone earnings was not as large as previously expected, the decline was viewed as excessive.
Analyst Cho added, “Fundamentals continue to show a solid trend. With orders for chillers for AI data centers (AI DC) expected to exceed 3 trillion won within the year, the point at which these orders will contribute to earnings is drawing near.”