[Click eStock] "LG Innotek Expected to Strengthen Cooperation with Apple"

Semiconductor Substrate Sector, Profitability Expected to Improve with Selective Investment
Daishin Securities "LG Innotek Target Price Raised from 300,000 KRW to 380,000 KRW"

[Asia Economy Reporter Gong Byung-sun] There are expectations that LG Innotek's performance will maintain a stable growth trend. Future business cooperation with Apple is anticipated to serve as a growth driver.

On the 1st, Daishin Securities estimated LG Innotek's operating profit for this year to increase by 89% compared to the previous year, reaching 1.29 trillion KRW, and projected next year's operating profit at 1.27 trillion KRW. The operating profit exceeding 1 trillion KRW for two consecutive years indicates increasing stability in performance.

The cooperation with Apple is interpreted as influencing the performance. Next year, Apple plans to increase the pixel count of the iPhone camera compared to before, which will lead to a rise in LG Innotek's average supply price. Additionally, a budget model of Apple's smartphone is scheduled to be released in the first half of next year, which is positive in terms of operating rate. If Apple launches extended reality (XR) devices in the second half of next year, LG Innotek is expected to benefit indirectly.

Park Kang-ho, a researcher at Daishin Securities, explained, "LG Innotek's absolute market share is increasing in premium areas such as triple cameras, as well as in budget areas like single and dual cameras," adding, "If Apple pushes forward with new IT devices and the Apple Car business, it will likely strengthen cooperation with LG Innotek first."

The semiconductor substrate sector is also expected to expand high value-added areas and improve profitability next year. System-in-Package (SiP) and Antenna-in-Package (AiP) products are sectors that can achieve high growth through the transition to 5G smartphones. Due to limitations in increasing supply by competitors in Flip-Chip Chip-Scale Package (FC CSP), LG Innotek is expected to maintain favorable profitability. Researcher Park predicted, "Rather than participating in various products, selective investment in semiconductor substrates will achieve better-than-expected results this year and expand next year."

Along with the expansion of the electric vehicle market, the automotive components sector is also expected to turn profitable next year. This year, due to a shortage of automotive semiconductors, sales of automotive components are predicted to decline and fixed costs will be burdensome. From next year, increased sales and economies of scale are likely to lead to operating profit turning positive. Furthermore, as traditional IT companies increase their participation in the global electric vehicle market, LG Innotek's competitiveness in camera modules and semiconductor substrates is also being highlighted.

Accordingly, Daishin Securities maintained a "Buy" investment opinion on LG Innotek. The target stock price was raised from the previous 300,000 KRW to 380,000 KRW. The closing price on the previous day was 304,500 KRW.

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