LG Electronics Inc. shares deemed undervalued against its global peers have seen the bottom and have an ample room in the upside, market analysts advise.
Based on intraday high and low prices, shares of the Korean electronics maker have fallen 23.3 percent in the last three months, according to the Korea Exchange on Monday. LG Electronics stock hit 114,500 won ($106.37) during the trading session on March 22 but dipped below 90,000 won on June 1. Its stocks are currently hovering around 90,000 won.
LG Electronics shares closed Monday 1.12 percent higher at 90,000 won.
Despite the stocks’ lackluster performance, market analysts expected the Korean electronics giant’s stocks should recover, citing low stock valuation compared to its global peers and positive earnings outlook for the second quarter and full 2018.
The early sign of recovery can be the steady purchase by offshore investors. Foreign ownership of LG Electronics stocks stood at 35.51 percent as of June 8, up from 33.67 percent at the beginning of this year. Overseas investors had net bought 279.6 billion won worth of LG Electronics shares over the cited period and 113.8 billion won worth shares since early May.
Market analysts also expected the company’s vehicle component business that the company is nurturing as its next growth engine is expected to swing to profits in the second half of this year, and its acquisition of Aussie automotive lights maker ZKW should be a great addition to its automotive electronics business. They also noted that its home appliance division is enjoying heyday with its premium lineups.
The company stocks, however, do not reflect the positive momentum, trading at a price-earnings ratio of 7.7 based on fiscal 2018 earnings projection that is far below those of its global peers such as Medea Group with 17, Sony 14, GE 15, and Whirlpool 10.
According to local market data provider FnGuide, the electronics maker’s operating profit in the second quarter ending June this year is projected to jump 31.6 percent to 874.1 billion won from the same period last year and that of full 2018 to hit a record high of 3.58 trillion won, up from 2.47 trillion won of last year.
By Ko Min-suh and Cho Jeehyun
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]