LG Electronics Announces Surprise Q1 Earnings, Boosting New Business Prospects

LG Electronics announced preliminary Q1 results that surpassed market expectations, raising hopes for its new businesses. Solid fundamentals in its core businesses drove the performance, followed by upward revisions to target stock prices from the securities industry.

Following the Q1 earnings announcement, the securities industry unanimously raised LG Electronics' target stock prices, presenting positive outlooks. Among the 11 brokerages that set target prices, 9 increased them, with the average target price across these firms standing at 141,000 Korean won. Notably, Hana Securities significantly adjusted its target price upwards by over 48%, from 108,000 won to 160,000 won.

This achievement by LG Electronics is attributed to the sophistication of its B2B-centric business structure and a focus on monetization strategies. The automotive component (automotive electronics) business, expected to surpass 12 trillion won in revenue this year, is projected to become a new cash cow following home appliances, driven by stable order backlogs. The MS Business Headquarters, responsible for the TV business, also succeeded in improving structural profitability through operational efficiencies.

The securities industry predicts further re-evaluations of corporate value as new businesses, including robotics and AIDC cooling solutions, accelerate. The analysis suggests that LG Electronics' full-scale application of its accumulated motor and control technology and mass production capabilities from its home appliance business to the robot actuator business, along with the smooth progress of the AIDC cooling solution certification process, will act as positive momentum. NH Investment & Securities highlighted the ongoing AIDC cooling solution certification process for clients, noting that given the typical 1-2 year certification period, positive momentum could emerge relatively quickly.

Ryu Jae-chul, CEO of LG Electronics, has designated this year as the "year of full-scale robot business rollout," pledging to concentrate efforts on four key areas: robotics, AIDC cooling solutions, smart factories, and AI Home. LG Electronics plans to become a key supplier in the multi-trillion won robot actuator market by independently designing and producing actuators, which account for 40% of robot costs. Simultaneously, it aims to accelerate its home robot business based on AI appliance data. Leveraging its world-class home appliance motor technology and an annual production infrastructure capable of 45 million units, the company has established itself as a core supplier in the robot actuator market. It plans to expedite its home robot business using the large-scale lifestyle data acquired through its AI appliance operations. The AIDC cooling solution business is being strengthened with a lineup that includes liquid cooling, as LG Electronics seeks to become a key infrastructure partner for global big tech companies.