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[Alpha Biz=(Chicago) Reporter Paul Lee] Hanwha Investment & Securities lowered the target stock price from 13,500 won to 12,500 won, believing that LG U+'s performance in the fourth quarter of last year would fall below the consensus (average market forecast). The investment opinion was maintained at 'buy'.
"Considering the capacity to cut costs and the market for affordable phones, we believe that we need to accept the multiple that has been lowered in 2023," Hanwha Investment & Securities said in a report.
LG Uplus' sales in the fourth quarter of last year, estimated by Hanwha Investment & Securities, rose 1.4% to KRW 3.7 trillion compared to the same period last year. Operating profit for the same period fell 20 percent to 229.6 billion won. Operating profit is down 15.6% from the consensus of 271.9 billion won. In addition, the operating profit based on the annual consolidated financial statements last year was estimated at 1.1 trillion won.
Hanwha Investment & Securities said, "The main reason for the decrease in operating profit is the rise in utility costs and the establishment of a company-wide sales management system," adding, "The impact of the increase in power costs due to the construction of base stations was stronger than that of other companies, and the opening of the Pyeongchon 2nd Center of the Internet Data Center (IDC) may have contributed to the additional increase in costs."
Hanwha Investment & Securities urged LG Uplus to start cost efficiency.
AlphaBIZ 폴 리(hoondork1977@alphabiz.co.kr)
