"LG Electronics Could Win Up to 3 Trillion Won in AI Data Center HVAC Orders in Second Half": Daishin Securities

[Financial News] LG Electronics is expanding its HVAC orders as AI data centers become more widespread. After securing approximately 600 billion won in HVAC orders during the first half of this year, the company is currently pursuing 2 trillion to 3 trillion won in orders for the second half. Analysts expect its profitability to improve during the latter half of the year.
Park Kang-ho, a researcher at Daishin Securities, said on the 29th, "LG Electronics is seeing increased orders for chillers and air-conditioning equipment for artificial intelligence (AI) and data centers, which are part of its new-growth business-to-business (B2B) operations." He forecast, "Taking supply and production timelines into account, the ES business's operating profit margin will improve after the second quarter of next year as high-value-added sales expand."
The assessment is that LG Electronics has secured a competitive edge over its rivals as cooperation between the company and global corporations has strengthened, including Chairman Koo Kwang-mo's recent AI business alliance with Microsoft (MS).
"LG Electronics has software and power-linked solutions related to cooling equipment centered on chillers," Park said. "It also possesses liquid-cooling technology that gives it an advantage in high-capacity heat treatment, as well as a cooling value chain covering cold plates, CDUs, chillers and external heat dissipation. Its package competitiveness, which enables cooperation with LG Group, is another strength." He explained that NVIDIA's recent approval of AI Factory specifications for LG Electronics' 2.5-megawatt-class Coolant Distribution Unit (CDU), a core piece of equipment for thermal management in AI data centers, demonstrated the company's competitiveness. 
Analysts also advised that the development of concrete cooperation between LG Electronics and NVIDIA in the robotics business warrants attention. The expectation is that LG Electronics will expand its business from B2C to B2B by leveraging its high-quality robotics-related data and software, along with the in-house production of key components.
The growing share of high-value-added sales in its vehicle component solutions (VS) business, including headlamps and electric vehicle components, could also lead to further improvements in profitability. 
Park estimated that LG Electronics' operating profit for the third quarter of this year would reach 941.9 billion won, up 36.7% from the same period last year. Excluding the weak performance of LG Innotek, which is included in the consolidated results, LG Electronics' standalone operating profit for the third quarter is estimated at 792.3 billion won, representing 65.7% growth from a year earlier.


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