[Click eStock] "LG Innotek, Despite Record-Breaking Strong Performance, Stock Price Remains Undervalued"

[Asia Economy Reporter Park Jihwan] Daishin Securities evaluated that despite LG Innotek's continued strong performance, its stock price remains undervalued. They maintained a 'Buy' investment rating and a target price of 300,000 KRW.

Park Kangho, a researcher at Daishin Securities, stated, "Operating profit on a consolidated basis for Q4 is expected to be 406.6 billion KRW, up 18.8% year-on-year, and sales are expected to increase by 24.6% to 4.79 trillion KRW," adding, "It is forecasted to set a new quarterly record high." Considering that Q4 is an off-season for the IT industry, this performance is regarded as exceeding expectations. Following Q3 of this year, an increase in sales of Apple-bound camera modules and growth in sales and profits of substrate materials centered on semiconductor PCBs are anticipated.

Researcher Park Kangho commented, "Considering that Apple's iPhone 13 production targets have decreased compared to before due to supply chain issues, the impact on LG Innotek's optical solutions is judged to be limited," and evaluated, "Camera module sales showed significant growth exceeding consensus, supported by an increase in average selling price (ASP) compared to the previous year (compared to iPhone 12) due to the addition of sensor shift and the transition to supplying 3D cameras in module form, as well as an increase in market share within Apple due to competitors' production disruptions."

Despite the strong performance, the stock price is described as historically undervalued in terms of valuation. Researcher Park said, "Considering the continued strong performance next year, there is high potential for stock price appreciation," and added, "Investment points are expected to continue high growth centered on optical solutions and semiconductor substrates in 2022. The total operating profit is expected to be 1.24 trillion KRW in 2021 and 1.18 trillion KRW in 2022, marking an era of annual operating profits exceeding one trillion KRW. He stated, "With secured competitiveness in camera modules within Apple, proactive development participation and leadership, and increased market share even in entry-level models, high utilization rates and ASP growth are expected."

In particular, an increase in semiconductor PCB sales and profitability expansion next year are also anticipated. Researcher Park forecasted, "Semiconductor PCB sales are expected to exceed overall external growth," and predicted, "With the expansion of the 5G smartphone market, sales centered on SiP and AiP will expand, leading market growth."

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