[이코노믹리뷰=정다희 기자] As the possibility of LG Electronics’ withdrawal of the smartphone business became official, the target price of LG Electronics (066570) is gradually increasing. The industry predicts that if the MC (Mobile Communications) division, which has been in the red, is closed, LG Electronics’ undervaluation compared to competitors will be resolved.
According to industry sources on the 21st, Korea Investment & Securities, Eugene Investment & Securities, Samsung Securities, Hyundai Motor Securities, and Hi Investment & Securities raised LG Electronics’ target price. LG Electronics’ target price has been raised to a maximum of 230,000 won.
Korea Investment & Securities raised the target price of LG Electronics from 180,000 won to 220,000 won.
Cho Cheol-hee, a researcher at Korea Investment & Securities Co., said, “The MC division has suffered an operating loss for 23 consecutive quarters since the second quarter of 2015. Despite the relocation of smartphone production bases to Vietnam for the past two years and the increase in the proportion of ODMs, the performance has not improved.” As LG Electronics officially decided to withdraw, sell, and reduce the policy direction for the MC headquarters, the operating value of the MC business, which had a large deficit, was changed from -5 trillion won to 0 won.”
Eugene Investment & Securities increased from 170,000 won to 220,000 won.
Roh Gyeong-tak, a researcher at Eugene Investment & Securities, said, “The MC headquarters was in charge of 23% of company-wide consolidated sales of 13 trillion won in the past. It is expected that the sales and restructuring will resolve the operating deficit, which has been a major part of the company, and increase business concentration on home appliances, electronic components, and B2B with global competitiveness.”
Samsung Securities also raised it from 170,000 won to 220,000 won.
Lee Jong-wook, a researcher at Samsung Securities, said, “Although the stock price has skyrocketed, the company is changing rapidly,” and predicted that “along with concentrating the company’s resources toward EV parts, the withdrawal of the mobile business will be another stock price trigger.”
Shinhan Investment Corp. said, “We have to watch the final decision,” and “the direction of reducing the deficit related to smartphones has become clear.” Shinhan Investment Corp. did not raise its target price.
Hyundai Motor Securities raised LG Electronics’ target price from KRW 105,000 to KRW 190,000. However, rather than the withdrawal of the MC division, the focus was on the growth of the rest of the divisions according to the demand for eco-friendly products.
“LG Electronics is expected to overgrow, focusing on new home appliances, and is transforming into a platform company.” While it is expected, the negative impact on the performance of the MC division will be limited.” Center Director Noh Geun-Chang said, “As (LG Electronics) is fully aware of the opportunities and limitations of the MC division, the impact of the MC division on the company’s performance will be further reduced.”
Hi Investment & Securities predicts that the withdrawal of the smartphone business will relieve the undervaluation of competitors. Hi Investment & Securities raised LG Electronics’ target price from 185,000 won to 230,000 won.
Ko Eui-young, a researcher at Hi Investment & Securities, added, “Even if the business is withdrawn, the actual deficit improvement may be partially limited because the management has specified that the employment of related personnel will be maintained through relocation.”
As of 9:56 am on the day, LG Electronics’ stock price is trading at 165,000 won, down 1.2% from the previous trading day.