Daishin Securities has maintained a 'Buy' rating on LG Electronics and raised its target price from 240,000 won to 270,000 won. The increase is attributed to a rise in data center orders and the visibility of revenue from the robotics business, which are expected to serve as new growth drivers.
Park Kang-ho, a researcher at Daishin Securities, stated, "LG Electronics is moving away from its traditional focus on home appliance sales, with increasing orders for B2B new businesses such as AI and data center chillers and air conditioning systems." He added that profitability in the automotive parts business is expected to improve, and revenue from the robotics sector is becoming clearer, indicating a need to expand investment at this time.
According to Daishin Securities, LG Electronics' consolidated operating profit for the third quarter of this year is estimated to be 941.9 billion won, a 36.7% increase compared to the same period last year, while sales are projected to rise by 13.2% to 24.755 trillion won.
Growth is also anticipated for next year. LG Electronics has secured orders worth 600 billion won in the AI and data center cooling solutions sector, with an additional estimated 2 to 3 trillion won in orders expected in the third and fourth quarters. Considering supply and production timelines, revenue from high-value products is expected to expand after the second quarter of next year, leading to improved operating profit margins in the eco-solution business.
The robotics business is also expanding. Park noted, "As collaboration with NVIDIA becomes more concrete, we expect to expand from B2C to B2B by internalizing quality data, software, and key components."
Profitability in the automotive parts business is also expected to improve, particularly in the headlamp and electric vehicle components sectors. Park projected that operating profit in the VS division is expected to increase by 56.6% compared to last year, indicating that orders secured with a focus on profitability are entering a phase where they will be reflected in sales.
* This article has been translated by AI.
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