[Into the Stock] LG Innotek, Praised by Top Analyst... Strong Performance as Beneficiary of Apple Car and Metaverse Trends

[Asia Economy Reporter Ji-hwan Park] LG Innotek is drawing attention as it records an all-time high stock price, driven by its outstanding strong earnings streak and its position as a leading beneficiary of Apple Car and metaverse-related businesses.

According to the Korea Exchange on the 16th, LG Innotek closed at 331,500 KRW, up 9.59% from the previous trading day. This is the highest closing price ever recorded. During the trading session, the stock rose as much as 9.75% to 332,000 KRW, setting a new intraday high. LG Innotek is an electronic components company under the LG Group, producing smartphone camera modules, semiconductor substrates, and automotive electronic components.

LG Innotek's stock price showed a sluggish trend throughout this year. From February until early last month, it remained stuck in a box range between the high 100,000 KRW and low 200,000 KRW levels. However, a turnaround drama unfolded starting last month. Since November, the stock price rose 58.2%, from 209,500 KRW to 331,500 KRW.

The primary driver behind LG Innotek's stock price increase is its earnings momentum. Operating profit, which reached 347 billion KRW in Q1, halved to 152 billion KRW in Q2, raising concerns about performance. However, the company successfully recovered with 336 billion KRW in Q3, and operating profit for Q4 is expected to approach 500 billion KRW. LG Innotek is set to newly join the 1 trillion KRW operating profit club this year. Securities firms forecast LG Innotek's annual sales at 14.1481 trillion KRW and operating profit at 1.2812 trillion KRW, representing increases of 48.3% and 88.1%, respectively, compared to the previous year. The improvement in operating profit is expected to continue clearly, with 1.3158 trillion KRW in 2023 and 1.4832 trillion KRW in 2024, marking a yearly performance level-up. This contrasts with concerns that major domestic companies' earnings will peak out starting from Q3 and Q4.

Strong market dominance is also a strength. Jong-wook Lee, a researcher at Samsung Securities, said, "Differentiated technical experience is required to secure assembly yield in the camera module business," adding, "Considering LG Innotek's solid position among its clients, an annual operating profit of 1.2 trillion KRW should now be considered the baseline scenario."

Positive factors also include the new business initiatives of its major client Apple (metaverse XR, Apple Car). Securities analysts predict that LG Innotek's stock price momentum will continue starting with extended reality (XR) devices next year, followed by folded camera integration in 2023, foldable smartphones in 2024, and autonomous vehicles and augmented reality (AR) glasses in 2025. Dong-joo Lee, a researcher at SK Securities, said, "Extended reality (XR) devices are the gateway to realizing the metaverse," adding, "North American manufacturers plan to equip many time-of-flight (ToF) cameras that enhance spatial recognition accuracy, and LG Innotek's core role is highly anticipated."

According to FnGuide, among 41 securities reports that raised their target prices this month up to the previous day, 6 increased LG Innotek's target price. The average target price is 379,000 KRW, indicating a 14.3% upside potential compared to the current stock price.

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