Korea Investment & Securities has lowered its outlook on the price of LG Electronics stocks due to the latter’s drop in operating profits. The company is reportedly struggling to maintain its momentum in several of its industries, specifically the smartphone and television products.
Previously ranging around 97,000 won per share, LG Electronics’ shares are now forecasted at 84,000 won each. The securities exchange said that a flip on the prices is very unlikely any time soon.
The forecast came a day after LG Electronics released their 2019’s second-quarter financial statement. During April to June 2019, the company recorded KRW 652.3 billion as their operating income, which is 15.4 percent lower than the operating income for the same period last year.
It is noteworthy, however, that the company was able to earn higher revenue this year in comparison to last year’s second quarter. The company made KRW 6.10 trillion in sales from April to June 2019. Their revenue is higher by 4.1 percent than last year for the same period. According to reports, the inconsistency may be due to the falling prices of electronic devices worldwide.
What Is Happening With LG Electronic Stocks?
“Most companies in the smartphone industry have suffered a slowdown of demand,” said Park Hyung-woo, a financial analyst. “In the TV market, competition has become fiercer as Samsung Electronics, as well as Chinese companies, have lowered the prices for large LCD panels,” continued. Park also attributed the decline to LG’s decision to relocate its domestic smartphone production to Vietnam.
One of the most significant contributors to the companies drop in operating income is its mobile communications division. Cho Cheol-Hee, a financial analyst, mentioned that the division has been experiencing an operating loss for the past 17 quarters. LG’s home entertainment division, on the other hand, saw a 49.2 percent decrease in its operating profit from last year.
“LG Electronics needs to make a breakthrough for its home entertainment and mobile communications divisions,” Cho said during a press conference.
LG’s third-quarter earnings also have a bleak future, according to IBK Securities. The company predicts a 35 percent lower operating profit for July to September compared to the same period last year. Another Investment firm, Shinhan Investment, has likewise lowered its forecast for LG Electronics stocks from 89,000 won to 83,000 won.