LG Electronics (066570.KS): Strong seasonality with no headwinds
LGE shares have been outperforming the benchmark index for the following three reasons: 1) it is not affected by the concerns that the memory semiconductor market has probably peaked; rather, if memory prices fall, it could help to narrow smartphone losses; 2) the uncertainties over the iPhone X may hamper Innotek’s earnings but the consolidated earnings from Innotek have shown little correlation with stock performance; and 3) the impact of KRW strength is neutral on LGE, as the domestic market represents 30% of sales and a stronger KRW can work to reduce costs for the TV business. Furthermore, 1H is typically a strong-demand season for home appliances, the company’s cash cow, which worked to boost sentiment going into 1Q18. That said, we have not witnessed a turnaround of the VC business yet and the smartphone division’s losses are not decreasing as fast as desired due to rapidly rising memory prices. Against this backdrop, we would advise investors to buy on dips rather than rushing to purchase the rallying stock.
LG Electronics Co. is a holding company that operates through three companies: Digital Display, Digital Appliance, and Digital Media. Co. is engaged in electronics and telecommunications operations. Co. focuses on Digital TV, CD-RW, DVD, CD-ROM, DVD-ROM Drives, PCs, Monitors, Mobile Handsets, CRTs and PDPs.
Hyundai Motor Investment & Securities is the investment banking arm of the Hyundai Motor Group. The company offers stock brokerage and advisory services; derivative products brokerage and advisory services; wrap account portfolio management services; and VIP wealth management and tax planning, institutional equities, derivatives, and futures brokerage services, as well as sells investment and institutional products. It also provides equity offering, ABS, real estate PF and real estate PF securitization, offshore SOC, structured financing, asset securitization, real estate sales, IPO advisory, and private equity fund and fund management services; and CMA/RP portfolio management and fixed income based investments, as well as involved in the issuance, management, and brokerage of OTC derivatives. In addition, the company offers research services, including macro economic forecasts and stock market outlook, industry overviews and forecasts, fixed income strategies, corporate credit analysis, and valuation analysis. Further, it offers a range of retirement and pension services for individuals and corporate members; portfolios and asset allocation consulting and marketing services; proposing retirement pension plans; contract and payment management services; pension plan advisory and actuarial services; and system development and implementation services, as well as operates call centers for retirement pension services, etc.
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