[Edaily Reporter Shin Ha-yeon ] On the 29th, IBK Investment & Securities assessed that LGELECTRONICS(066570)posted solid third-quarter earnings despite sluggish demand for home appliances. However, the firm projected that profitability would decline significantly in the fourth quarter due to the seasonal off-peak period. Reflecting the expansion of artificial intelligence (AI)-related products and the growth potential of the data center air conditioning business, the firm maintained its “Buy” rating and raised the target price from 180,000 won to 200,000 won.

Kim Un-ho, an analyst at IBK Investment & Securities, stated in a report released today, “We assess LGELECTRONICS’ third-quarter 2026 earnings as having held up well, even though they fell short of previous forecasts,” adding, “Despite sluggish demand for durable goods, revenue growth in the 7% range stands out compared to competitors.”

LGELECTRONICS’ third-quarter revenue, excluding LG Innotek, totaled 17.5697 trillion won, a 5.6% increase year-over-year. Operating profit rose 47.1% to 703.6 billion won. However, compared to previous forecasts, revenue fell short by 4.7% and operating profit by 6.8%.

By business division, the Media & Entertainment Solutions (MS) division showed a notable improvement in profitability. The MS division posted third-quarter revenue of 5.0215 trillion won, up 7.9% year-over-year, and returned to profitability with an operating profit of 146.7 billion won. Improved product mix and cost efficiency underpinned these results.

Analyst Kim noted, “Apart from the MS division, which exceeded expectations, no other division stood out significantly.” He added, “We believe this is largely due to the ongoing impact of large-scale cost-cutting efforts initiated after 2025.”

The Home Solutions (HS) division posted revenue of 7.0444 trillion won, a 7.0% increase year-over-year. While sales of entry-level products and the expansion of subscription services drove revenue growth, operating profit fell 28.9% to 259.2 billion won due to rising logistics and marketing costs.

The Vehicle Solutions (VS) division, which handles the automotive electronics business, posted revenue of 2.8261 trillion won and operating profit of 190.3 billion won, up 6.8% and 27.2%, respectively. The Eco Solutions (ES) division saw operating profit fall 34.4% to 87.2 billion won due to a deterioration in product mix, despite strong performance in the North American and European HVAC markets.

The impact of the seasonal off-peak period is expected to become more pronounced in the fourth quarter. IBK Investment & Securities projected LGELECTRONICS’ fourth-quarter revenue at 16.9491 trillion won, a 3.5% increase year-over-year. It forecast an operating loss of 2.1 billion won, predicting a significant reduction in the loss compared to the 443.3 billion won loss recorded in the fourth quarter of last year.

Analyst Kim stated, “LGELECTRONICS has worked throughout the year to avoid an operating loss in the fourth quarter, and we expect it to achieve an operating profit at the break-even point,” but added, “We believe it will be difficult to overcome the ‘high first half, low second half’ pattern, with operating profits of 2.7 trillion won in the first half and 700 billion won in the second half.”

In the medium to long term, AI-related businesses are seen as a new growth engine. In particular, attention is focused on the growth potential of the heating, ventilation, and air conditioning (HVAC) business, driven by expanding demand for data center HVAC systems. IBK Investment & Securities projected that fourth-quarter revenue in the ES division would increase by approximately 12% year-over-year, with some revenue from AI data centers also expected to be reflected.

However, analysts note that it will take time for these new businesses to begin contributing significantly to earnings. Analyst Kim explained, “While the company is making efforts to secure AI-related revenue to overcome this challenge, we expect it will take some time before earnings from these areas reach a meaningful level.”

The upward revision of the target price reflects the visibility of growth in the HVAC business. Analyst Kim assessed, “Through restructuring at the end of 2025, the effects of improved cost structures are being realized, particularly in the MS division; the company is maintaining industry-leading growth even amid a sluggish market, and the VS division’s profitability has returned to normal levels.”

He added, “This is because the company’s efforts to expand into AI-related product lines are particularly noteworthy,” and stated, “We have raised the valuation of the ES division based on the growing visibility of the HVAC business.”