November 22, 2024

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[THE INVESTOR] LG Electronics has widely beaten analysts’ estimates in the first quarter, said Mirae Asset Daewoo on April 10, raising the target price to 96,000 won (US$84.09) from 87,700 won. 

Its revenue rose 9.7 percent to 14.66 trillion won from the same period last year, and operating profit surged 82.4 percent to 921.5 billion, well above the estimated 600.1 billion won, said analyst Park Won-jae. 

The tech company has improved across the sectors, and the recovery of mobile communications division is faster than expected, said the analyst. The restructuring, carried out following the disastrous launch of G5, has led the division to turn to black from a year ago with 18.3 billion won operating profit, estimated Park. 

KTB Investment and Securities was stricter, saying that the earnings surprise was largely due to cost control besides the effect of early release of G6. 

The cost control is generally effective but is bound to weaken, said analyst Kim Yang-jae. The sales and administration costs in the fourth quarter last year came in at 3.37 trillion won, the highest in the same period on record, and the cost in this quarter must have fallen sharply, noted the analyst. 

The increase in revenue was limited except for the MC division. Since demand is still slow and the prices of major raw materials are rising, its profit could be dented, said Kim. 

The analyst raised the target price to 68,000 won from 65,000 won but maintained a “neutral” rating, estimating that LG Electronics’ whole-year revenue will reach 59.06 trillion won and operating profit will be 2.50 trillion won, up 6.7 percent and 86.5 percent on-year, respectively.

By Hwang You-mee (glamazon@heraldcorp.com)