Shinhan Investment Corp. announced on October 2 that it has raised its target price for LG Electronics from 180,000 won to 290,000 won, a 61% increase, citing the company's heating, ventilation, and air conditioning (HVAC) and robotics sectors as new growth drivers. The investment recommendation remains at 'buy.'
Analyst Oh Kang-ho stated, "The key factors determining stock price direction are shifting from the existing performance-focused home appliances (HS) and vehicle components (VS) sectors to the valuation aspects of robotics and ES (HVAC). Considering the expected orders from the fourth quarter of this year to the first quarter of next year and events like CES, it is a timely moment for valuation to stand out."
For the third quarter of this year, Shinhan Investment forecasts sales to reach 24.1 trillion won, a 10% increase year-on-year, with operating profit expected to rise 45% to 1 trillion won. Although the operating profit estimate has been lowered by 11% due to a downward revision in the performance forecast for its affiliate LG Innotek, the growth trend in major business divisions remains solid.
Particularly noteworthy is the growth potential in the HVAC and robotics sectors. LG Electronics secured 600 billion won in cooling solution orders in the first half of this year, and Shinhan Investment predicts that revenue and operating profit in the ES sector will increase by 17% and 39%, respectively, next year. Following its registration as a partner in the network power and cooling sector with NVIDIA, LG has also completed product unit specification approvals. In the robotics sector, production batches for validation testing of the Cloid robot and the establishment of a pilot production line for actuators are currently underway.
Oh highlighted the reasons for the target price increase, stating, "The full-scale entry into the AI market for HVAC next year, accelerated commercialization of the robotics business, and stable growth in existing divisions such as home appliances and vehicle components make LG Electronics a representative IT company to watch as it enters the AI value chain."
* This article has been translated by AI.
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