[Click eStock] "LG Innotek, Reflecting Q1 Exchange Rate Effects... Expecting Performance Improvement"

[Asia Economy Reporter Minji Lee] IBK Investment & Securities maintained a buy rating and a target price of 185,000 KRW for LG Innotek on the 25th, expecting favorable first-quarter earnings due to exchange rate effects.

LG Innotek is expected to record first-quarter sales of 1.5694 trillion KRW, a 47% decrease compared to the previous quarter. Operating profit is forecasted to drop 70% during the same period to 62.5 billion KRW.

Kim Unho, a researcher at IBK Investment & Securities, said, "Compared to the previous quarter, sales declined due to seasonality, significantly lowering the profitability of optical solutions," adding, "Operating profit forecasts have improved due to the KRW-USD exchange rate effect." Operating profit fluctuates by approximately 4.5 billion KRW per quarter for every 10 KRW change in the KRW-USD rate. Previous earnings estimates were calculated based on a KRW-USD rate of 1,130, so an earnings increase is expected.

The company's total sales for this year are expected to increase by 11% from last year to 9.2733 trillion KRW. Sales across all business divisions except LED are projected to grow significantly. Operating profit is expected to rise 56% to 619.2 billion KRW. Researcher Kim Unho explained, "The sales and profitability improvement in optical solutions will be the largest," and "Sales and operating profit across all business divisions will contribute to earnings improvement."

LG Innotek is not expected to experience earnings deterioration due to the impact of the novel coronavirus disease (COVID-19). Rather, stable growth is anticipated through efficiency improvements in underperforming divisions by the end of the year.

Researcher Kim Unho added, "There will be no changes in the launch schedules of overseas clients in the second half of the year," and "Since the company's position within overseas clients is expected to remain stable, earnings improvement is anticipated this year."

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