[Click eStock] "LG Innotek Expected to Exceed This Year's Operating Profit Consensus by 30%... Target Price Up"
[Asia Economy Reporter Song Hwajeong] Meritz Securities raised the target price of LG Innotek from KRW 250,000 to KRW 286,000 on the 8th, expecting this year's performance growth to exceed market expectations. The investment opinion was maintained as 'Buy.'
Researcher Joo Minwoo of Meritz Securities said, "Reflecting the 22% upward revision of this year's operating profit forecast, the target price was raised to KRW 286,000," adding, "LG Innotek's operating profit this year is expected to reach KRW 1 trillion, exceeding the consensus (KRW 828.4 billion) by 30%."
LG Innotek is expected to record a surprise earnings performance in the first quarter this year. Meritz Securities estimated LG Innotek's first-quarter operating profit at KRW 340.1 billion, surpassing the consensus (KRW 220.3 billion) by 54%. Researcher Joo explained, "Because the production volume plan for the iPhone 13 series in the second half is so large, legacy models below the iPhone 12 series were produced in advance," adding, "Additionally, the rise in the KRW-USD exchange rate in the first quarter and the automotive parts division turning profitable are reasons for the surprise earnings."
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The advance production of legacy models implies a large production volume of the iPhone 13 series in the second half, serving as an opportunity to confirm Apple's confidence in the demand for the iPhone 13 in the second half. Researcher Joo said, "The reasons Apple is confident in iPhone 13 demand include the expansion of vaccinations and economic normalization leading to revenge consumption in the second half, replacement demand from iPhone users who purchased record-breaking units in 2016-2017, and changes in the front and back design of the iPhone," explaining, "The cumulative sales volume of new models in 2016-2017 over four quarters was 289 million units, and last year's iPhone 12 series sales are estimated at 56.7 million units. Even assuming a 50% repurchase rate among 2016-2017 new model buyers, the potential demand for the iPhone 13 exceeds 80 million units."
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