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[Alpha Biz= Reporter Kim Minyoung] KB Securities analyzed on the 17th that LG Electronics' stock price is expected to be reassessed due to a sharp increase in air conditioner sales and revenue from AI data center cooling systems.

"Over the past year, LG Electronics' stock price has dropped by 20.7% (2.9% since the beginning of the year), recording a 12-month PBR (Price-to-Book Ratio) of 0.74x and PER (Price-to-Earnings Ratio) of 5.9x, which is historically at the lower end of the average over the past 10 years (PBR 0.7x)," KB Securities stated. "However, with the recent surge in system air conditioner sales driven by early heatwaves, increased shipments of AI data center cooling systems to North American big tech firms, and strong performance in HVAC (Heating, Ventilation, and Air Conditioning) revenue, we anticipate a reevaluation of LG Electronics' stock price going forward."

KB Securities added, "With a significant increase in sales of cooling appliances and growing demand for chillers required for AI data center heat management, LG Electronics' Air Solution division is currently operating at full capacity in the second quarter. We forecast LG Electronics' home appliance operating profit to reach a record high, increasing by 29% year-on-year to 771.5 billion KRW, the highest since the second quarter of 2019 (717.5 billion KRW)."

Looking ahead, KB Securities projected, "By 2025, LG Electronics' HVAC revenue is expected to reach 5.3 trillion KRW, with AI data center cooling systems accounting for approximately 1.1 trillion KRW, representing 20.8% of HVAC revenue. In 2024 and 2025, driven by strong demand for HVAC and cooling appliances including system air conditioners, LG Electronics' operating profit is expected to achieve record highs of 4.5 trillion KRW (up 27% year-on-year) and 5.5 trillion KRW (up 22% year-on-year), respectively."

This analysis underscores KB Securities' optimistic outlook on LG Electronics' future prospects driven by its strong performance in the air conditioning and AI data center sectors.

 

 

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