Rivals Samsung Electro-Mechanics and LG Innotek: Stock Prices Move Together Despite Divergent Earnings

[Asia Economy Reporter Koh Hyung-kwang] Samsung Electro-Mechanics and LG Innotek, leading domestic electronic component companies, experienced mixed results in their performance last year. However, the stock prices of both companies continue to trend upward amid expectations of improved business conditions due to the expansion of the 5th generation mobile communication (5G) market.

According to the Korea Exchange on the 30th, LG Innotek closed at 158,000 won, up 4.3% the previous day. It reached a 52-week high, rising 29.5% over the past two months. Compared to the low of 90,700 won on August 6 last year, it surged 74.2%.

It is analyzed that the stock price is also gaining strength as LG Innotek posted its best-ever performance last year, supported by strong sales of its core business, high-performance camera modules. LG Innotek achieved sales of 8.3021 trillion won and an operating profit of 403.1 billion won last year. Compared to the previous year, sales increased by 4% and operating profit by 53%. Lee Kyu-ha, a researcher at NH Investment & Securities, said, "Strong performance was achieved due to increased sales of premium smartphone parts," and added, "This year, the overall volume from customers will expand as North American clients launch their first 5G smartphones and reintroduce mid-to-low-end smartphones after four years, so strong performance is expected to continue."

Unlike LG Innotek, Samsung Electro-Mechanics' performance shrank last year. Although sales increased by 0.5% year-on-year to 8.04 trillion won, operating profit fell 36% to 734 billion won. Due to decreased demand, sales of major products such as multilayer ceramic capacitors (MLCC) and camera modules declined, causing the performance to slump. Despite the performance, the stock price has shown a similar trend to LG Innotek, which achieved strong results, rising about 20% over the past two months and nearly 60% compared to last year's low point (August 7). On the 22nd, it even reached a 52-week high of 137,000 won.

The stock price rise was led by foreigners. Samsung Electro-Mechanics was the most purchased stock by foreigners over the past two months, with net buying worth 475.3 billion won. This amount exceeds the purchase volume of Samsung Electronics (445.4 billion won) during the same period. This appears to reflect expectations for future performance improvement. Kim Rok-ho, a researcher at Hana Financial Investment, forecasted, "This year, with the recovery of MLCC demand and a boom in substrates, sales and operating profit are expected to increase by 7% and 24%, respectively, compared to last year."

Industry experts expect both companies to continue their growth trend this year due to improved business conditions from the full-scale expansion of the 5G market. Park Won-jae, a researcher at Mirae Asset Daewoo, said, "Both companies are expected to benefit from increased 5G investment and enhanced smartphone camera module functions," adding, "Samsung Electro-Mechanics is expected to see increased demand for high-value-added MLCC products due to 5G expansion, and LG Innotek is expected to continue its performance improvement trend this year as iPhone shipments are anticipated to increase."

This content was produced with the assistance of AI translation services.