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The previous day, CEO Kwon Bong-seok, the CEO of LG Electronics, said in an e-mail sent to the business division of the smartphone, etc., “We are reviewing the direction of business operation with all possibilities open to the MC division.”
This is interpreted as meaning that all possibilities for related businesses such as reduction, sale, and maintenance are open. However, in principle, it is a policy to maintain employment within the MC headquarters.
LG Electronics’ MC business division has suffered an operating loss for 23 consecutive quarters from the second quarter of 2015 to the fourth quarter of last year, and the accumulated deficit so far is 500 million won. If limited to last year, the estimated sales amount to 5.2 trillion won, accounting for only 8.3% of the company’s sales, but the operating deficit amounts to 838 billion won.
Cho Cheol-hee, a researcher at Korea Investment & Securities, said, “In the past two years, LG Electronics has not improved its performance despite efforts such as relocating its production base to Vietnam, so it is estimated that various solutions are being sought.” Heon said that the development of communication-related technologies can continue, so it will not negatively affect other business units.”
It is a positive factor that the burden of deficit has been reduced without affecting existing businesses. Researcher Cho said, “We estimate the operating value of the MC division by changing the current KRW 5 trillion in deficit to KRW 0. As LG Electronics officially decided to withdraw, sell, or reduce, it is assumed that the future operating value will also converge to zero. I did” he explained.
He said, “The target price of 220,000 won corresponds to 2.1x the PBR of this year, which is similar to the average 2.2x of similar companies such as home appliances and TVs.” It is worth recommending,” he added.