[Click eStock] LG Innotek Unfazed by COVID-19... "Record-Breaking Performance Expected in Second Half"

Exchange Rate Effect and Popularity of New iPhone Model Lead to Strong Performance
1Q Operating Profit Exceeds Market Forecast by 16%
Camera Component Prices and Demand Rise Together... Record-Breaking Performance Expected in Second Half of the Year

[Asia Economy Reporter Minwoo Lee] Despite the economic downturn caused by the novel coronavirus infection (COVID-19), LG Innotek's operating profit for the first quarter of this year is expected to exceed market forecasts. As both the unit price and demand for smartphone camera components are expected to rise, there is an analysis that the company could aim for record-high performance in the second half of this year.

On the 5th, Meritz Securities forecast LG Innotek's first-quarter sales at 1.6 trillion KRW and operating profit at 48.6 billion KRW. Although these figures represent decreases of 45.9% and 76.8% respectively compared to the same period last year, this is due to production disruptions of iPhones in China caused by COVID-19. In fact, the operating profit exceeded market expectations by 16%. This was attributed to the exchange rate effect (a quarterly change of 3.6 billion KRW per 10 KRW fluctuation) and strong sales of the new iPhone model in January (a 35% increase compared to the same period last year).

Researcher Juminwoo from Meritz Securities explained, "The operating rate of Foxconn factories in China has risen from 10% on February 10 to over 50% currently," adding, "The iPhone production disruption is expected to be resolved, and since iPhone sales have entered a seasonal off-peak period, the impact of COVID-19 is limited."

Better performance is expected this year. As major high-end smartphones adopt triple cameras, both the unit price and demand for components are expected to increase. Researcher Joo said, "The trend of attaching optical image stabilization (OIS) to sensors is raising the price of camera modules, and shipments of new models in the second half are expected to increase by 10% year-on-year to 72.8 million units," adding, "With the introduction of time-of-flight (ToF) functionality in cameras, additional new sales worth 960 billion KRW are expected, so record-high operating profit can be achieved."

Meritz Securities gave LG Innotek a 'Buy' investment rating with a target price of 190,000 KRW. The closing price on the previous day was 136,000 KRW.

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