[Click eStock] "LG Innotek, the Biggest Beneficiary of Autonomous Vehicles... Stock Price Expected to Continue Upward Trend"

[Asia Economy Reporter Park Ji-hwan] On the 6th, KB Securities forecasted that LG Innotek, an automotive parts company simultaneously possessing core technologies for cameras and communication components essential for autonomous vehicles, has a bright future business value outlook. They maintained a buy rating and a target price of 400,000 KRW.

Dongwon Kim, a researcher at KB Securities, stated, "LG Innotek is the only automotive parts company that simultaneously holds technologies for optical components (LiDAR, radar, camera) and communication components (V2X modules), which are core to autonomous vehicles. It is expected to have a high possibility of supplying autonomous vehicle parts to global companies such as Apple and Tesla in the future." From the second half of this year, the automotive parts business is expected to turn around in performance due to increased shipments of autonomous vehicle parts. Considering the future business value of the automotive business, it is analyzed that the stock price could reach 550,000 KRW and the market capitalization could exceed 13 trillion KRW in the mid to long term.

Currently, LG Innotek's automotive parts business, which has secured an order backlog of 10 trillion KRW, is expected to achieve profitability from the second half of this year, marking a performance turnaround after six years. The automotive parts business, which recorded a deficit of 200 billion KRW over the past five years, completed the order backlog normalization by removing low-profit orders and cost structure optimization starting in 2019, with the process concluding last year.

Researcher Kim Dongwon said, "From the second half of this year, the automotive parts business is expected to show a clear trend of performance improvement along with the easing of vehicle semiconductor supply shortages." He added, "Although the annual sales of the automotive parts business currently stand at only about 1.4 trillion KRW, with an annual order increase of 2 to 3 trillion KRW, it is estimated that long-term sales could more than double to reach 3 trillion KRW compared to the current level."

Despite abundant positive factors, the stock price is still considered undervalued. Researcher Kim said, "Despite the recent stock price rise, LG Innotek is judged not to have reflected the future growth value of new businesses such as autonomous vehicles and the metaverse."

He forecasted, "Although LG Innotek holds core LiDAR technology, which plays the most important role in autonomous vehicles, the current price-to-earnings ratio based on annual performance is only 8.7 times. It is recording historically low valuation levels, so the potential for mid- to long-term stock price growth is expected to be greater than initially anticipated."

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