LG Elec VS division to gain traction in bottom line and valuation via JV with Magna

[Source: LG Electronics Inc.]

LG Electronics Inc. expects to make its first income from operating vehicle component solution in the second half, bolstering the business valuation to near $5 billion timed with the launch of a joint venture with Magna International Inc. devoted to electric vehicle powertrain next month.

LG Magna e-Powertrain, a JV between South Korean technology giant and Canada-based world’s No. 3 auto parts company, will officially set sail on July 1, according to industry sources on Thursday. The industry expects the JV will be a driver of a strong turnaround in LG Electronics’ vehicle component solutions division that has not made any money since launch.

LG Electronics in April estimated the new JV will see more than 50 percent on-year growth in revenue. Most brokerage houses now agree with the estimation, projecting 500 billion won ($441.6 million) revenue this year, nearly doubled from a year ago.

Based on the average annual growth of LG Electronics, LG Magna e-Powertrain is forecast to rake in over 1 trillion won in sales in 2023 and 2 trillion won in 2025.

The anticipated rapid growth of the JV will contribute to an income on the vehicle component solutions category of parent’s financial statement in the second half. Analysts recently have revised up the valuation on the business to over 5 trillion won from 3 trillion won level.

LG Electronics shares finished 1.62 percent higher at 157,000 won in Seoul trading on Friday.

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