[Click eStock] "LG Innotek's 550 Billion KRW New Investment in Camera Modules, Growth Momentum Up This Year"

Continuous Growth in Camera Module Demand... Strong Orders for Automotive Components Maintained

On September 22 last year, employees are inspecting equipment at LG Innotek's Gumi plant. (Provided by LG Innotek) [Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] LG Innotek has announced a large-scale new facility investment plan amounting to 550 billion KRW. With the rising unit prices of various camera modules and the anticipated growth of the virtual reality (VR) and augmented reality (AR) markets, continuous growth is expected.

On the 18th, Shinhan Financial Investment maintained its 'Buy' rating on LG Innotek based on this background and raised the target price by 5.8% to 275,000 KRW. The closing price the previous day was 211,000 KRW.

Previously, LG Innotek disclosed a new investment plan of approximately 547.8 billion KRW. The purpose is to expand and strengthen production capacity related to the optical solutions (camera module) business. The product groups planned for expansion are expected to include ▲ Sensor-shift camera modules ▲ SL (Structured Light) 3D sensing modules ▲ ToF modules. Hyungwoo Park, senior researcher at Shinhan Financial Investment, forecasted, "A strong cooperative relationship with clients continues, so sales growth is expected to continue this year as well."

Shinhan Financial Investment expects LG Innotek to achieve an operating profit of 797.5 billion KRW this year, a 17% increase compared to last year. Although some concerns have been raised about the dualization of the production structure as LG Innotek entrusts camera assembly to overseas original equipment manufacturers (OEMs), analysis suggests that the benefits from camera upgrades are stronger. This year, the adoption of sensor-shift cameras, introduced for the first time last year, is expected to expand, leading to an increase in the average selling price (ASP) of cameras based on single modules. As the VR and AR markets expand, ToF is expected to be actively adopted beyond this year into 2022. Additionally, upgrades to ultra-wide cameras are anticipated, and sales growth of 3D SL (facial recognition) modules for fingerprint recognition adoption is expected to continue.

Researcher Park stated, "Last year, sales increased by 25% and operating profit by 130% compared to the previous boom year of 2017, and net profit improvement is also expected this year, but the current price-to-book ratio (PBR) does not reach the 2.3 times level of that time." He evaluated, "Technological changes and increased demand for automotive components will be the growth drivers for 2022's performance. Despite intense order quality adjustments over the past two years, the current accumulated order backlog reaches 10 trillion KRW."

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