[Click eStock] "LG Innotek, Improvement in All Business Divisions... Strong Q2 Performance Expected"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained its buy rating and target price of 270,000 KRW for LG Innotek on the 30th. This is based on the judgment that all business divisions recorded strong performance, leading to an expected increase in this year's profit forecast.

LG Innotek posted sales of 3.0703 trillion KRW in the first quarter, a 56% increase compared to the same period last year. Operating profit grew by 97% to 346.8 billion KRW. Both sales and operating profit exceeded market expectations by 2% and 13%, respectively.

Kim Rok-ho, a researcher at Hana Financial Investment, said, "The 2-metal COF, which has good profitability in substrate materials, contributed to both sales and operating profit with higher-than-expected volume," adding, "The automotive components division turned profitable, and all business units, centered on the optical solutions division, boosted operating profit."

LG Innotek's expected sales for the second quarter are 2.1085 trillion KRW, with operating profit forecasted at 110.5 billion KRW. The second quarter traditionally marks the seasonal off-season as the product life cycle of North American customers enters its final stage. However, this year is expected to record the highest quarterly operating profit.

Researcher Kim explained, "Due to delays in product launches for North American customers, volume has been maintained better than in the past, and the profit contribution from substrate materials has also increased," adding, "The trend of profitability turnaround in automotive components is also expected to continue."

This year, considering the strong performance in the optical solutions division, high profitability in the substrate materials division, and the profitability turnaround in automotive components, LG Innotek's annual operating profit is expected to exceed 1 trillion KRW. Although there is a lack of performance momentum during the traditional off-season, the profitability turnaround in automotive components and the expanded profit contribution from substrate materials appear to have secured downside support for the stock price.

Researcher Kim Rok-ho stated, "Although there are no clear investment points emerging in the automotive components division, it is encouraging that it has started contributing to performance through profitability turnaround," and added, "The fact that the company has secured North American electric vehicle manufacturers as customers in the camera module area, which has high growth visibility, enhances the company's competitiveness."

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