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[Alpha Biz=(Chicago) Reporter Paul Lee] LG Electronics, which had an operating profit of less than 100 billion won in the fourth quarter of last year, is expected to quickly improve its performance in the first quarter of this year to exceed 1 trillion won and overtake Samsung Electronics.

Securities firms are predicting that stock prices may surpass 160,000 won as LG Electronics' profitability improved significantly due to a sharp drop in inventory and a sharp drop in logistics costs.

According to financial information provider FnGuide on the 22nd, the estimated first-quarter operating profit of six securities firms that published reports on LG Electronics this month was 1.2458 trillion won.

The operating profit of 11 securities firms for Samsung Electronics is 21.4% higher than the estimated 1.26 trillion won. Last month alone, analysts at securities firms expected LG Electronics' first-quarter operating profit to fall below KRW 1 trillion, but the mood has recently reversed.

The profitability improvement of LG Electronics has been a top priority for inventory management. The deterioration of LG Electronics' profitability last year was also an increase in inventory, which was quickly improved by management.

The sharp drop in costs is also a factor that raises LG Electronics' earnings expectations.

From late 2021 to early last year, the Shanghai Container Fare Index (SCFI) exceeded 5,000 points, the highest level in 10 years. However, SCFI recently plunged below 1,000 points, and the electronics industry estimates that LG Electronics' logistics costs have decreased by more than 30% compared to last year.

In addition, LG Electronics' business units, including home appliances (H&A), business solutions (BS), and battlefields (VS), are operating at more than 100% and profitability of new businesses is becoming visible. Stock markets predict that new businesses such as smart factories as well as the robot sector, whose sales double every year, will continue to grow.

Meanwhile, LG Electronics' stock price exceeded 120,000 won for the first time in 11 months since the end of April last year and rose 0.79% to 114,200 won on the same day.

 

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