[Click eStock] "LG Innotek, Strong Smartphone Sales... A Non-Seasonal First Quarter"

Kiwoom Securities Report

[Asia Economy Reporter Minji Lee] Kiwoom Securities on the 10th expressed expectations for strong first-quarter earnings for LG Innotek, issuing a buy rating and a target price of 260,000 KRW.

Operating profit for the first quarter is expected to reach 312.1 billion KRW, surpassing market estimates of 225 billion KRW. Despite being an off-season, it is anticipated to record the highest level ever. Ji-san Kim, a researcher at Kiwoom Securities, stated, “The shipment volume and product mix of optical solutions are favorable, which will be reflected in profitability exceeding expectations,” adding, “Triple cameras and ToF sales for the iPhone 12 Pro series are inevitably strong.” According to smartphone market trends from last January, iPhone sales grew 29% year-on-year, with the Pro series accounting for 58% of the iPhone 12 series, and the top-tier Pro Max continues to be a popular product in the United States.

Substrate materials and automotive components are also expected to show better-than-expected performance. Within substrate materials, semiconductor substrates centered on mmWave AiP and SiP continue high growth, and display product lines such as Tape Substrate have performed well due to strong TV demand in the home economy environment. Despite supply shortages and production disruptions of automotive semiconductors, automotive components are predicted to attempt a turnaround through improved order quality, stabilization of overseas production, and expanded sales of autonomous driving components.

The estimated operating profit for this year is 952 billion KRW, expected to increase by 40% compared to the previous year. For optical solutions, strengthening the dominance of strategic customers’ premium smartphones, changes in camera module supply methods, and increased market share within customers due to a favorable competitive environment are expected to be key factors.

Researcher Ji-san Kim said, “Based on continuous specification evolution centered on sensor-shift triple cameras, significant sales growth is possible this year as well,” and added, “A facility investment plan worth 550 billion KRW was also announced last year.”

Additionally, semiconductor substrates are expected to strengthen their leading position in 5G communication substrates, and demand for the delayed 10.5-generation photomasks is expected to increase. The leading progress in autonomous driving cameras and sensor modules, along with expectations for a turnaround to profitability in automotive components, is anticipated to provide grounds for a revaluation of corporate value.

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