[Click eStock] "LG Innotek, Stock Price Expected to Rise Due to Strong Sales to Strategic Clients"

Daishin Securities Report

[Asia Economy Reporter Gong Byung-sun] Daishin Securities on the 26th raised the target price for LG Innotek from 230,000 KRW to 250,000 KRW, expecting significant growth given the increase in sales in the fourth quarter of last year and the strong sales of premium smartphones by strategic customers this year. The investment rating was maintained as 'Buy.'

Park Kang-ho, a researcher at Daishin Securities, said, "Both sales (3.8423 trillion KRW) and operating profit (342.3 billion KRW) in the fourth quarter of last year exceeded consensus," adding, "Changing the LED business to a discontinued operation and excluding it also had a positive impact."

Sales of optical solutions in the fourth quarter of last year amounted to approximately 3.057 trillion KRW, a 36% increase compared to the same period last year. The supply of triple cameras increased due to strong smartphone sales by strategic customers. Semiconductor printed circuit board (PCB) sales also contributed to the performance increase with a 50.2% rise.

Operating profit in the first quarter of this year is estimated to reach 235.2 billion KRW, continuing the strong sales of premium smartphones by strategic customers. Researcher Park said, "Operating profit in the first quarter is expected to increase by 33.8% compared to the same period last year," adding, "This figure exceeds the previous consensus of 170.6 billion KRW."

The total operating profit for this year is expected to reach 842.2 billion KRW, a 24% increase compared to the same period last year, exceeding consensus. The continued rise in average selling price (ASP) due to an increase in models applying 3D sensing cameras and sensor shift functions is also a positive factor. Strategic customers are expected to trigger replacement demand in the 5G market, causing a decline in competitors' market share while LG Innotek's market share is expected to rise.

High growth in semiconductor substrates is also expected to be maintained. Researcher Park explained, "Sales of the semiconductor substrate materials division are expected to increase by 25.9% compared to the same period last year," adding, "Along with volume growth, price increases are expected to further improve the profit margin."

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