[Click eStock] "LG Innotek, Beneficiary of Autonomous Driving Market Expansion"

[Asia Economy Reporter Ji Yeon-jin] KB Securities announced on the 15th that despite the recent rise in LG Innotek's stock price, considering the next year's valuation with a current price-earnings ratio (PER) of about 7.8 times, there is sufficient room for further increase, maintaining a buy investment opinion and a target price of 350,000 KRW.

Dongwon Kim, a researcher at KB Securities, said, "Compared to global parts competitors, the market capitalization could exceed 10 trillion KRW (420,000 KRW per share) from a mid- to long-term perspective," adding, "Apple, which accounts for 78% (11 trillion KRW) of LG Innotek's total sales, has a solid mid- to long-term growth roadmap for the next five years, and with the expansion of autonomous vehicle parts shipments, a performance turnaround in the automotive parts business is expected in the second half of next year. The target price of 350,000 KRW essentially does not reflect the value of Apple's new businesses (Metaverse XR, Apple Car)."

LG Innotek's automotive parts division currently holds an order backlog worth 10 trillion KRW and is considered the biggest beneficiary of the expanding autonomous vehicle market. LG Innotek is already supplying core autonomous vehicle parts (LiDAR, radar, V2X modules, motor sensors, cameras) to 15 global automobile companies, with new supplies expected in the future.

Researcher Kim stated, "In particular, the automotive parts division is expected to secure North America's largest electric vehicle company as a new customer, and the order normalization process (eliminating low-profit orders) will be completed this year, leading to a full-scale performance turnaround phase starting in the second half of next year." He added, "Since 2022, LG Innotek's business structure is expected to expand from smartphone (iPhone) parts to metaverse (XR) and autonomous vehicles (Apple Car) alongside accelerated digital transformation (DT) after the COVID-19 pandemic."

Although LG Innotek's quarterly operating profit averaged around 200 billion KRW over the past three years, it is estimated to reach an average of 300 to 400 billion KRW per quarter (1.2 trillion to 1.6 trillion KRW annually) over the next three years. Researcher Kim said, "With the expected launch of Apple's Metaverse XR in 2022 and the unveiling of the autonomous electric vehicle Apple Car in 2025, the possibility of supplying core parts is expanding, and based on the improved performance strength, LG Innotek is expected to enter a full-scale stock price revaluation phase."

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