Korea Investment & Securities on the 18th
LG Electronics
LG Electronics
066570
|
KOSPI
Securities information
Current price
112,100
Compared to the previous day
Rate of change
0.00%
Trading volume
0
Jeonilga
112,000
2024.07.18 07:45 Jang Operation (20 minutes delayed)
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Regarding “We are transforming into a B2B (business-to-business) company” Coverage (analysis) was initiated with an investment opinion of buy and a target price of 160,000 won. The previous day’s closing price was 112,100 won.
Panoramic view of LG Twitter Tower in Yeouido, Seoul / Reporter Kang Jin-hyung aymsdream@
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Park Sang-hyun, a researcher at Korea Investment & Securities, said, “LG Electronics is at a turning point as its business center of gravity shifts from B2C (business-to-consumer) to B2B,” adding, “The proportion of B2B business in total sales has steadily increased from 26.0% in 2020 to 35% last year.”
He analyzed, “Dell can be cited as an example of a company that succeeded in the ‘B2B transition’. As personal PCs entered the low-growth maturity stage, Dell strengthened its B2B business capabilities, including corporate PCs, servers, storage, and networking infrastructure products.”
He emphasized, “Dell’s transformation has been successful. From 2015 to last year, the data center infrastructure division’s sales grew by 10.7% at a compound annual growth rate (CAGR), and the average annual operating profit growth rate for the fiscal years 2020 to 2023 is a whopping 30.1%.” He added, “Dell at that time and LG Electronics today are very similar. The B2B success formula proven by Dell can also be applied to LG Electronics.”
This year’s B2B business sales and operating profit are estimated at 28.3 trillion won and 1.3 trillion won, respectively. Researcher Park said, “Excluding LG Innotek, the B2B business will account for 41.8% of total performance in sales and 42.5% in operating profit,” adding, “We also expect mid- to long-term growth and profitability until 2028. Over the next five years, the sales and operating profit of the B2B business will increase by 10.6% and 27.4% CAGR, respectively. This will significantly exceed the estimated growth rates of 3.3% and 8.8% for the B2C business during this period.”
Reporter Kim Dae-hyun kdh@asiae.co.kr
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Source: www.asiae.co.kr
