[SEN]Yujin Investment Corp. “LG Electronics officially withdraws from smartphone business… Target price↑”

[서울경제TV=김혜영기자]Eugene Investment & Securities LG Electronics (066570)Regarding, we raised our Buy rating and target price to W220,000 from W170,000, saying, “The valuation discount is expected to be resolved due to the mid- to long-term deficit structure of the smartphone business.”

Researcher Roh Gyeong-Tak said, “LG Electronics, through an e-mail sent to the members of the MC division in charge of the smartphone business on the previous day (20th), revealed that the MC division was open to all possibilities and carefully reviewed the direction of business operation.” “As the direction of the smartphone business was officially confirmed, LG Electronics’ stock price ended up 12.8% on the previous day.”

“MC headquarters was in charge of 23% of company-wide consolidated sales with 13 trillion won in sales in the past. However, due to continued sluggishness and decreased sales volume, sales in 2020 decreased to 5.3 trillion won and the proportion was reduced to 8.3%.” The average of the four years is 800 billion won, and the loss is expected to continue at 670 billion won in 2021.”

Researcher Roh said, “In the future, sales and restructuring will resolve the operating deficit, which has been a significant part of the business, and it is expected to increase business concentration on home appliances, electronic components, and B2B with global competitiveness.” The decision was made at the time of full-scale growth of LG Electronics, suggesting that the direction and speed of LG Electronics’ business strategies have changed from the past.”

He said, “LG Electronics’ 2021 results, assuming that the operating deficit of the smartphone business is resolved, is expected to improve significantly with sales of 62.3 trillion won (existing 67.3 trillion won) and operating profit of 4.5 trillion won (existing 3.8 trillion won). The earnings estimate will be changed after the direction of the sale or restructuring of the MC headquarters is determined.

In addition, the target price was recalculated based on the operating values of the home appliance/TV/electronic parts/ITB2B divisions with global competitiveness. In the second half of the year, the turnaround of electronic components is expected to achieve a surplus structure for all business units and to secure global competitiveness through active investment in future industries such as autonomous driving and robots.”/[email protected]

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