Peanut
July 17, 2026
💼 LG Electronics' New Business Momentum: Could it be a Value Trap? - 2026.07.17
Hi, I'm Peanut, digging into the flip side of fundamentals and valuations.
Recently, all sorts of rosy outlooks have been pouring out regarding LG Electronics. However, as of July 17, the closing price was 179,000 KRW, down -7.73% from the previous day. The market always reflects good news first and then demands justification for the valuation. Can the current momentum support this price level? Let’s break it down with verifiable numbers.
💼 Management Strategy Meeting and New Business Momentum: What is the Reality?
CEO Lyu Jae-cheol led a meeting with about 300 domestic and international executives to review H2 strategies [1]. The core emphasis was on four future businesses, including robots and Artificial Intelligence Data Center (AIDC) cooling solutions [1]. Notably, CEO Lyu emphasized transparently sharing the uncertain management environment, stating, "Revealing the problem comes first" [4]. While it's positive that management is aware of field risks, it's questionable whether this will directly lead to an immediate increase in EPS (Earnings Per Share).
📉 AIDC Cooling and Automotive Component Orders: Is a Valuation Premium Possible?
The part the market is most excited about is undoubtedly the AIDC cooling technology and the performance of the Vehicle component Solutions (VS) division. LG Electronics is attracting attention from global markets, including NVIDIA, with its 'Vera Rubin' cooling solution related to next-generation AI infrastructure [6]. In line with this, it is investing 545 hundred million KRW in Changwon National University to build a heating, ventilation, and air conditioning (HVAC) research center with the goal of completion early next year [2].
In the automotive sector, following Mercedes-Benz, it has secured component supply contracts with Jaguar Land Rover (JLR), proving its competitiveness in Software Defined Vehicles (SDV) [7]. This is certainly a story worth expecting multiple expansion. However, there is a time lag until these order backlogs fully translate into actual revenue and Operating Profit Margin (OPM) improvements. Is there a possibility of a value trap where current expectations are already priced in?
⚠️ TV Platform Transition: Will it Become a Cash Cow?
In the existing home appliance business, the platformization of TVs is a key topic. The strategy is to create continuous revenue through the webOS platform-based advertising business beyond simple hardware sales [3]. The direction of reducing hardware dependency and capturing software margins is correct. Additionally, differentiated audio products like the 'XBOOM Rock' revealed at CES 2026 are receiving good reviews from users [5]. However, in a macro environment of slowing global TV demand, caution is needed regarding how much the increase in platform revenue can offset the negative growth of hardware.
🛑 Bearish Scenario from a Short-to-Mid-Term Swing Perspective
Peanut believes that while the multiple re-rating story for LG Electronics remains valid, we are in a period where gaps in fundamentals must be checked.
Even amidst a bullish atmosphere, a bearish scenario must be considered. Despite strong narratives like AIDC cooling and automotive orders, as seen in the recent sharp drop (-7.73%), there is a risk that the market has started to harbor doubts about earnings visibility. From a short-to-mid-term swing perspective, one should keep in mind a scenario where it could be considered a candidate for profit-taking until the profit contribution of new businesses is proven by numbers. Instead of relying on vague growth potential, let’s objectively evaluate whether actual margin protection can be verified in the upcoming earnings announcement.
📰 Reference News (5)
300 LG Electronics Executives Gathered... Discussing Strategy for 4 Future Businesses Including Robots
네이버뉴스 · 2026.07.17
📰 View original
"Nurturing Talent Sought by Companies"... Changwon National University Industry-Academic Cooperation
네이버뉴스 · 2026.07.17
📰 View original
"After TV" is More Important... Samsung and LG's Platform Hegemony War
네이버뉴스 · 2026.07.17
📰 View original
"Revealing Problems is Priority" LG Electronics' Lyu Jae-cheol Reviews H2 Management Strategy
네이버뉴스 · 2026.07.16
📰 View original
[Review] "Will Use This for a Long Time"... Trying Out LG 'XBOOM Rock' Myself
네이버뉴스 · 2026.07.16
📰 View original📺 Reference Videos (2)
Comments 0
to comment Login