Samsung Securities on October 29 projected that LG Electronics' stock price will rise, driven by the solid profitability of its existing businesses and the expansion of new ventures such as artificial intelligence (AI) data center cooling solutions and robotics. The firm maintained its investment rating of 'Buy' and target price of 250,000 won.
Lee Jong-wook, a researcher at Samsung Securities, reported that LG Electronics' third-quarter revenue reached 23.8241 trillion won, with an operating profit of 781.9 billion won, marking increases of 8.9% and 13.5%, respectively, compared to the same period last year.
Despite challenges such as increased logistics costs due to the Middle East conflict and weak demand for home appliances, the company's business-to-business (B2B) and appliance subscription services continued to grow steadily. Notably, the automotive components division maintained robust profitability, supporting overall performance.
By business segment, profitability improved in the TV sector, while operating profit in the air conditioning division declined. Although profits from the home appliance sector fell short of expectations, the automotive components division exceeded forecasts.
Samsung Securities identified AI data center cooling solutions, automotive components, and robotics as key drivers for LG Electronics' stock price in the future. The cumulative orders for AI data center cooling solutions have reportedly surpassed 3 trillion won, heightening growth expectations.
LG Electronics has secured NVIDIA approval for its cooling distribution units (CDUs) in both 1 megawatt (MW) and 2.6 MW products. The company is also accelerating its business expansion by signing a supply contract for air control concepts at a scale of 5 gigawatts (GW).
Lee noted that while it will take time for the cooling solutions business to contribute significantly to profits, the gradual expansion of collaborations with major clients and the acquisition of technological competitiveness are positive developments.
Changes are also anticipated in the robotics sector. LG Electronics is working to enhance the performance of its robot foundation model through the operation of 'LG Data Factory' in the fourth quarter of this year. Although specific external sales plans have not yet been established, it is expected to contribute to data acquisition and the commercialization of the robotics business.
Strengthening shareholder return policies is another positive factor. LG Electronics has decided to retire all 730,000 shares repurchased this year and plans an additional 100 billion won in shareholder returns next year.
Samsung Securities forecasts LG Electronics' revenue for this year to be 94.487 trillion won and operating profit to be 4.048 trillion won, which are 1.9% and 3.5% lower than previous estimates, respectively. Next year's operating profit is expected to increase by approximately 9.3% to 4.423 trillion won.
Lee anticipates that the stable profitability of existing businesses, along with the growth of AI data center cooling solutions, automotive components, and the commercialization of robotics, will be the main drivers for future stock price increases.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.