[Click eStock] “LG Innotek, Camera Module Business Profits Exceed Expectations”

Camera and Recognition Technology as the First Gateway to Augmented Reality
Samsung Securities "LG Innotek Target Price Raised from 300,000 KRW to 350,000 KRW"

[Asia Economy Reporter Gong Byung-sun] Samsung Securities has raised the target price of LG Innotek by about 16%. This is interpreted as a positive impact on performance due to the solidified position in the camera module business.

On the 10th, Samsung Securities maintained its investment opinion of "Buy" on LG Innotek. The target price was raised from the previous 300,000 KRW to 350,000 KRW. The closing price on the previous day was 300,000 KRW.

The profit from the camera module business is expected to exceed expectations. Although LG Innotek is a module assembly company, Samsung Securities estimated that LG Innotek's return on equity (ROE) will reach 30% this year and 22% next year. ROE is an indicator that shows how much profit a company has generated using its capital.

Researcher Lee Jong-wook of Samsung Securities explained, "This profitability was achieved by winning the competition in smartphone camera production capacity over the past 10 years," adding, "It also proves that differentiated technical experience is necessary to secure assembly yield of optical products."

Furthermore, the camera business is expected to serve as a growth engine in the mid to long term. This is because camera and recognition technology is the first gateway to the augmented reality business. In particular, LG Innotek is the only company that has experience in mass-producing augmented reality-related cameras as well as high-resolution cameras and collaborating with leading global augmented reality platform companies.

Samsung Securities also expressed the opinion that LG Innotek's annual operating profit should basically be set at around 1.2 trillion KRW. The reasons are the solid sales trends of client companies and LG Innotek's firm position. Samsung Securities forecasted next year's sales and operating profit to be 14.4 trillion KRW and 1.2 trillion KRW, respectively, which are 4% and 8% higher than the previous estimates.

Researcher Lee analyzed, "Due to high demand for new smartphones from client companies, orders will be extended until the first quarter of next year," and added, "In next year and the first half of 2023, mid- to low-priced products will be released continuously to defend the off-season."

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