[Click eStock] "LG Innotek, Annual Operating Profit Capacity Grows to 1 Trillion Won"

[Asia Economy Reporter Song Hwajeong] Samsung Securities maintained its 'Buy' rating and target price of 300,000 KRW for LG Innotek on the 10th, expecting its annual operating profit capacity to grow up to 1 trillion KRW.

Jongwook Lee, a researcher at Samsung Securities, said, "LG Innotek's annual operating profit capacity is now 1 trillion KRW, and the pessimistic views of investors present an opportunity," adding, "Following the new product launch in September, initial sales feedback and consecutive earnings surprises in the second half will likely shift investors' perspectives to a more optimistic outlook."

Samsung Securities raised its Q3 operating profit estimate for LG Innotek by 11%, from 286.4 billion KRW to 318.1 billion KRW. The researcher explained, "This is due to an 18% upward revision in LG Innotek's camera shipments caused by initial production disruptions at competitors," and added, "Additionally, the exchange rate has been more favorable than expected, leading us to revise this year's annual operating profit estimate upward by 3.6% to 1.2 trillion KRW."

After the triple camera, investors have doubted LG Innotek's additional growth drivers, but this is a misconception. The researcher said, "Sales of camera modules for LG Innotek's new products are expected to grow 33%, from 1.78 trillion KRW last year to 2.36 trillion KRW this year," noting, "This is because the effect of sensor shift has exceeded expectations; sales of sensor shift modules for new products this year are expected to reach 1.7 trillion KRW, a 4.3-fold increase compared to 394 billion KRW last year." Future additional growth is also visible. Next year, the spread of LiDAR sensors (ToF) is anticipated, and if clients adopt folded zoom, additional growth drivers will be secured through 2024.

As the shortage of substrate supply is expected to last longer than anticipated, benefits from the substrate supply shortage are likely to continue into next year. The researcher said, "The shortage of substrates, such as System-in-Package (SiP) and Antenna-in-Package (AiP), where LG Innotek has strengths, will continue until the first half of next year," adding, "LG Innotek is considering entering the Flip Chip Ball Grid Array (FC-BGA) market; although there are risks in new entry, it will be an opportunity to recognize the value of substrates in the long term."

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