Meritz Securities announced on October 6 that it has raised its target price for LG Electronics from 220,000 won to 250,000 won, citing increased visibility in the growth of new businesses such as artificial intelligence (AI) data center cooling solutions and robotics. The investment opinion remains a 'buy.'
Yang Seung-soo, a researcher at Meritz Securities, stated, "The AI data center cooling solutions are expected to secure an order backlog of about 3 trillion won by the end of the year, with results becoming visible quickly." He added, "Revenue recognition is possible within approximately 7 to 9 months after orders are placed, and from 2027, we anticipate a simultaneous transition of existing order backlogs into revenue and an expansion of new orders."
He further explained, "In addition to air-cooled chillers, we expect additional orders from liquid cooling cooling distribution unit (CDU) products due to the expansion of certified items from client companies. We are currently in the process of certification for a 4MW product, and once certified, it is expected to enhance competitiveness in the high-capacity CDU market and drive additional orders."
Regarding robotics, he noted, "The key point is that commercialization will begin in earnest next year." He mentioned that approximately 200 Cloid robots are currently being deployed at the Yangjae data factory to learn and validate unstructured and repetitive tasks on the production line. He added, "We plan to gradually deploy them to our production base in the United States starting next year."
Yang emphasized, "New businesses such as AI data center cooling solutions and robotics, which have higher visibility in performance contribution compared to the past Apple Car, are becoming more concrete. At this point, we believe it is possible to apply a premium compared to the KOSPI average, and we are raising the target price by applying a 12.5% premium to the existing price-to-book ratio."
* This article has been translated by AI.
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