Samsung Securities, Eugene Investment & Securities, Korea Investment & Securities, Kiwoom Securities suggested an increase of 220,000 won
22~29% higher than before by securities company
Securities Market Expected to Lose 600-700 billion in MC Business This Year
Expecting improvement in operating profit when organizing business
It will also give a value discount to LG Electronics.
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Domestic securities companies LG Electronics (066570)It is forecasted that the corporate value will increase by more than 4 trillion won if the company organizes its smartphone business. Accordingly, LG Electronics’ share price target is also raised by more than 20%.
According to the securities industry on the 21st, Korea Investment & Securities raised the target price of LG Electronics by 22.2% from 180,000 won to 220,000 won. In addition, Eugene Investment & Securities and Samsung Securities raised 29.4% from 170,000 won to 220,000 won, Hi Investment & Securities raised 24.3% from 185,000 won to 230,000 won, and Kiwoom Securities also proposed 220,000 won as a new target the day before.
The reason why securities companies have hurried to raise their eye on LG Electronics is that the previous day, LG Electronics announced that it was reviewing the reorganization of the smartphone (MC) business, which continued to suffer losses. LG Electronics’ MC division continued to have operating losses for 23 consecutive quarters from the second quarter of 2015 to the fourth quarter of last year, and the accumulated operating deficit reached 5 trillion won by the end of last year. It is expected to lose 600 to 800 billion won this year. This is because if LG Electronics organizes its smartphone business, which is a deficit business, by selling it, the factors that have acted as a’minus’ of the company’s value will disappear and corporate value will be improved in the mid to long term. Currently, stock prices predict that LG Electronics’ operating profit forecast (consensus) for this year is about 3.7 trillion won, which is expected to exceed 4 trillion won immediately if the scale of the smartphone business deficit is excluded.
In fact, Samsung Securities expected to increase the value of 4 to 7 trillion won by solving the risk in the mobile sector, and Korea Investment & Securities also expects that the MC business division is causing a decrease in operating value of about 5 trillion won from the current corporate value. It is expected that this’minus’ will disappear and the value of the enterprise will increase substantially. However, as LG Electronics presupposes the maintenance of employment in the MC business division, there is a possibility that the value increase may decrease than expected, and if the business is closed through sale, the sale price may increase and the actual profit may increase. It is expected that more accurate forecasts can be produced. “It is undeniable that LG Electronics’ valuation was discounted compared to its competitors,” said Ko Eui-young, a researcher at Hi Investment & Securities.
//Reporter Park Seong-ho [email protected]
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