SKorea's LG Electronics Q4 results may top forecasts due to brisk handset sales
SEOUL, Jan 18, 2008 (Thomson Financial via COMTEX) -- LGEPF news PowerRating PR Charts -- LG Electronics Inc, a major global manufacturer of handset and other consumer electronics goods, is expected to announce fourth-quarter results that surpass year-earlier levels and analyst forecasts due to higher contributions from affiliate LG Philips LCD and robust margins across all divisions.
The company is scheduled to release its quarterly results on Thursday.
According to estimates compiled by Thomson Financial, net profit could reach 946.5 billion won on average, buoyed by a dramatic turnaround in LG Philips.
Operating profit earned by its headquarters and overseas operations is estimated at 379.4 billion won, up from 363 billion a year earlier.
Sales are expected to set a new record high of 10.9 trillion won, exceeding the 10 trillion won posted a year earlier.
"We expect LG Electronics' fourth-quarter sales to reach a historic high of 10.9 trillion won and its operating profit to reach (about) 380 billion won," JP Morgan's analyst Park Jeong-Jun said in a note to clients.
At an estimated 946.5 billion won, net profit would be at its highest level since the second quarter of 2004.
Nomura Securities said LG's fourth-quarter performance may have even topped its forecasts.
"LG Electronics has turned more upbeat than our forecasts and previous guidance for the fourth quarter," said Kim Hee-Yeon, a Nomura Securities analyst.
Kim said she is expecting LG's global operating profit to come in about 7.0 percent higher than her earlier forecast of 332 billion won for the fourth quarter.
"The company now expects handset shipments to reach 23.5 million units in the fourth quarter, up 7.3 percent from the third," Kim said.
LG Electronics may have also trimmed its losses in the plasma display panel division, which should boost its overall performance, she said.
"LG Electronics' fourth-quarter earnings are estimated to have exceeded our estimates, boosted by the performance of the display and handset divisions,"said Steve Lee, an analyst at Goodmorning Shinhan Securities.
Lee is projecting operating profit at 368.3 billion won, on sales of 10.78 trillion won.
Mobile handset sales are estimated at 23 million units in the fourth quarter, slightly higher than the company's guidance of 22.5 million units, Lee said.
"The strong debut of Viewty and Voyager (handset models) helped lift the average selling price by 8 percent from the third quarter, increasing the mobile communication division sales by 14 percent," he said.
Bear Stearns recently raised its earnings per share estimate for the company in the fourth quarter by 38 percent, citing strong handset sales and LG Philips LCD's upbeat results released on Monday.
The flat-panel display maker posted a record operating profit of 869 billion won, beating the market's forecast of 803.2 billion won.
"Our upward revision is driven by the better-than-expected performance of the handset division and LG Philips LCD's extremely good results," Bear Stearns said in a note.
Impact of US recession
Given investor fears of a looming recession in the US, the company's sales could be dented, analysts said, pointing to the LG-branded TV sets, PDPs, and home appliances, if not its key segment of handsets and displays.
"The stellar fourth-quarter results are overshadowed by weak near-term investor sentiment amid worries over cooling consumption in the US market, which accounts for 24 percent of LG Electronics' revenue," Goodmorning Shinhan's Lee said.
At the same time, Lee said a slowdown in the US economy will not likely have a substantial impact on LG Electronics' earnings as the company is making much headway into the European and emerging markets.
Lee said he is maintaining a 'buy' rating on the stock at a fair value of 131,000 won.
LG Electronics also appears able to mitigate the impact of the current financial crisis in the US, given its well-diversified markets, JP Morgan said.
"We believe the company's sales are diversified across the board," JP Morgan's Park said.
Park rated the stock 'overweight' with a six-month target price of 135,000 won.
"LG Electronics' share price momentum is intact due to a turnaround in its display division and stable earnings in its appliances and handset operations," Park said.
Nomura's Kim said that handsets -- LG Electronics' key growth driver -- should continue to post strong volume growth this year, with the company expecting an increase of about 20 percent from last year to 95-100 million units.
In Friday's trade, LG Electronics jumped 2,600 won or 3 percent to close at 90,300 won.
(1 US dollar = 942.8 won)
The company is scheduled to release its quarterly results on Thursday.
According to estimates compiled by Thomson Financial, net profit could reach 946.5 billion won on average, buoyed by a dramatic turnaround in LG Philips.
Operating profit earned by its headquarters and overseas operations is estimated at 379.4 billion won, up from 363 billion a year earlier.
Sales are expected to set a new record high of 10.9 trillion won, exceeding the 10 trillion won posted a year earlier.
"We expect LG Electronics' fourth-quarter sales to reach a historic high of 10.9 trillion won and its operating profit to reach (about) 380 billion won," JP Morgan's analyst Park Jeong-Jun said in a note to clients.
At an estimated 946.5 billion won, net profit would be at its highest level since the second quarter of 2004.
Nomura Securities said LG's fourth-quarter performance may have even topped its forecasts.
"LG Electronics has turned more upbeat than our forecasts and previous guidance for the fourth quarter," said Kim Hee-Yeon, a Nomura Securities analyst.
Kim said she is expecting LG's global operating profit to come in about 7.0 percent higher than her earlier forecast of 332 billion won for the fourth quarter.
"The company now expects handset shipments to reach 23.5 million units in the fourth quarter, up 7.3 percent from the third," Kim said.
LG Electronics may have also trimmed its losses in the plasma display panel division, which should boost its overall performance, she said.
"LG Electronics' fourth-quarter earnings are estimated to have exceeded our estimates, boosted by the performance of the display and handset divisions,"said Steve Lee, an analyst at Goodmorning Shinhan Securities.
Lee is projecting operating profit at 368.3 billion won, on sales of 10.78 trillion won.
Mobile handset sales are estimated at 23 million units in the fourth quarter, slightly higher than the company's guidance of 22.5 million units, Lee said.
"The strong debut of Viewty and Voyager (handset models) helped lift the average selling price by 8 percent from the third quarter, increasing the mobile communication division sales by 14 percent," he said.
Bear Stearns recently raised its earnings per share estimate for the company in the fourth quarter by 38 percent, citing strong handset sales and LG Philips LCD's upbeat results released on Monday.
The flat-panel display maker posted a record operating profit of 869 billion won, beating the market's forecast of 803.2 billion won.
"Our upward revision is driven by the better-than-expected performance of the handset division and LG Philips LCD's extremely good results," Bear Stearns said in a note.
Impact of US recession
Given investor fears of a looming recession in the US, the company's sales could be dented, analysts said, pointing to the LG-branded TV sets, PDPs, and home appliances, if not its key segment of handsets and displays.
"The stellar fourth-quarter results are overshadowed by weak near-term investor sentiment amid worries over cooling consumption in the US market, which accounts for 24 percent of LG Electronics' revenue," Goodmorning Shinhan's Lee said.
At the same time, Lee said a slowdown in the US economy will not likely have a substantial impact on LG Electronics' earnings as the company is making much headway into the European and emerging markets.
Lee said he is maintaining a 'buy' rating on the stock at a fair value of 131,000 won.
LG Electronics also appears able to mitigate the impact of the current financial crisis in the US, given its well-diversified markets, JP Morgan said.
"We believe the company's sales are diversified across the board," JP Morgan's Park said.
Park rated the stock 'overweight' with a six-month target price of 135,000 won.
"LG Electronics' share price momentum is intact due to a turnaround in its display division and stable earnings in its appliances and handset operations," Park said.
Nomura's Kim said that handsets -- LG Electronics' key growth driver -- should continue to post strong volume growth this year, with the company expecting an increase of about 20 percent from last year to 95-100 million units.
In Friday's trade, LG Electronics jumped 2,600 won or 3 percent to close at 90,300 won.
(1 US dollar = 942.8 won)
Posts
No comments: