This stock quietly tripled in a year... Analysts are raising their target prices too

[Financial News] LG Electronics, long regarded as a perennial undervalued stock in South Korea's stock market, has changed. After nearly tripling from the 70,000-won range to the 210,000-won range in a year, the company has prompted analysts to raise their target prices as well.  Yang Seungsoo, an analyst at Meritz Securities, assessed LG Electronics on the 6th, saying, "As the growth visibility of its cooling solutions for artificial intelligence data centers (AI DCs) and its robotics business improves, we believe the additional upside for the stock from a valuation re-rating will expand." He raised his target price from 220,000 won to 250,000 won.
Yang said, "In particular, the cooling solutions for AI DCs are expected to show results quickly, with an order backlog of approximately 3 trillion won secured by the end of the year," adding, "Unlike the former electronic-device (VS) business division, revenue can be recognized within approximately seven to nine months after an order is received. Starting next year, the conversion of the existing order backlog into revenue and the expansion of new orders are expected to occur simultaneously."
He continued, "Additional orders are expected not only for air-cooled chillers but also for Coolant Distribution Unit (CDU) products as the range of products certified by customers expands," adding, "LG Electronics has sequentially obtained certification for 600-kilowatt (kW), 1-megawatt (MW), and 2.5-MW CDU products for major customers, starting with the 600-kW class. It is currently undergoing certification for 4-MW products."
He added, "Since major competitors have yet to secure 4-MW certification, obtaining it is expected to strengthen LG Electronics' competitiveness in the high-capacity CDU market and drive further expansion of new orders."
Yang also explained, "The key is that while cooling solutions for AI DCs are expected to begin making a full-fledged contribution to earnings next year, robotics commercialization will also gather pace from next year," adding, "Securing domain data is essential for commercializing robotics, and LG Electronics has announced collaborations with major Physical AI software companies to accumulate data specialized in manufacturing and home environments."
He continued, "LG Electronics is currently using approximately 200 CLOiD robots at Yangjae Data Factory to conduct training and verification focused on unstructured and repetitive tasks on production lines," noting, "The company is particularly accumulating empirical data from processes that are difficult to automate and areas with a high degree of dependence on workers. Based on this data, it plans to deploy the robots sequentially at its U.S. production bases starting next year."
Finally, he added, "Actuators are currently being tested after being applied to the company's own robots, while external sales are expected to begin in earnest early next year."

[email protected] Han Young-jun Reporter