[Click eStock] "LG Innotek Secures Leading Position in Metaverse and Autonomous Driving"

Thanks to the Optical Solutions Division, Q3 Earnings Surpass Consensus
Kiwoom Securities "Maintains LG Innotek Target Price at 290,000 Won"

[Asia Economy Reporter Gong Byung-sun] LG Innotek posted third-quarter results this year that exceeded market consensus, driven by the strong performance of its optical solutions division. Furthermore, having secured a leading position in the metaverse and autonomous driving sectors, it is expected to act as a growth momentum going forward.

According to Kiwoom Securities on the 29th, LG Innotek's third-quarter sales this year reached KRW 3.7976 trillion, up 71.4% year-on-year, and operating profit rose 209.8% to KRW 335.7 billion during the same period. These figures surpassed consensus estimates by 9.78% and 7.15%, respectively.

The optical solutions division is interpreted as having led the strong performance. Third-quarter sales of optical solutions increased by 87% compared to the previous quarter, dispelling concerns over production disruptions of the new iPhone due to parts supply shortages. On the contrary, prolonged production disruptions among optical solution competitors created a more favorable environment in terms of volume, pricing, and operating rates. The product mix improved, focusing on high value-added sensor-shift cameras and Time-of-Flight (ToF) modules.

Among substrate materials, the strong performance of semiconductor substrates positively impacted results. Demand for communication substrates such as Radio Frequency System-in-Package (RF-SiP) and 5G antenna substrates remained robust. This led to record-high sales and profitability despite the supply shortage environment.

Looking ahead, the metaverse and autonomous driving sectors are expected to drive growth. In the metaverse sector, LG Innotek is leading the supply of cameras and ToF modules for virtual reality (VR) headsets, with customer diversification expected to materialize from next year.

The autonomous driving camera division firmly holds the industry’s number one position with sales of KRW 330 billion this year. It is anticipated to lead not only advanced driver-assistance system (ADAS) cameras for global electric vehicle customers but also the mobile LiDAR market.

Kim Ji-san, a researcher at Kiwoom Securities, stated, “Attention should be paid to the fact that among domestic hardware companies, LG Innotek holds a leading position in the metaverse and autonomous driving sectors,” adding, “This will act as momentum to break out of the excessively undervalued range.”

Accordingly, Kiwoom Securities maintained its investment opinion of ‘Buy’ on LG Innotek with a target price of KRW 290,000. The closing price on the previous day was KRW 209,500.

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