[Click eStock] LG Innotek, Apple Car's Biggest Beneficiary... Forecasted Record-Breaking Performance

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[Asia Economy Reporter Kwon Jae-hee] KB Securities maintained its 'Buy' rating and a target price of 500,000 KRW for LG Innotek on the 7th. This outlook is based on the expectation that LG Innotek's optical solution production line will operate at peak season levels despite the off-season, leading to record-breaking first-quarter earnings.

KB Securities pointed out that the improvement in LG Innotek's performance is due to iPhone 13 demand exceeding supply even six months after its launch, with sales outpacing production. Furthermore, the new iPhone SE, scheduled to be unveiled on March 9, is expected to feature some top-tier iPhone-level performance while being priced about 25% lower than its predecessor, entering the market as the first 5G iPhone in the 300,000 KRW range, which is anticipated to drive a significant increase in demand.

Accordingly, KB Securities revised upward LG Innotek's first-quarter earnings forecast. They projected sales of 4 trillion KRW and operating profit of 335.8 billion KRW, surpassing the peak season sales of 3.8 trillion KRW recorded in the third quarter of 2021. This would mark the highest first-quarter sales ever.

Researcher Kim Dong-won of KB Securities explained, "We raised the first-quarter optical solution sales forecast by 8.6% compared to previous estimates, reflecting strong sales of the iPhone 13 and increased shipments of the iPhone SE3," adding, "This is because shipments in the semiconductor substrate business, which has secured high profitability, are exceeding projections due to supply shortages."

As a result, LG Innotek is expected to achieve record-high performance this year. Sales and operating profit for 2022 are estimated to increase by 7.3% and 13.0% year-on-year, reaching 16 trillion KRW and 1.4 trillion KRW, respectively.

Researcher Kim stated, "Despite six months since the iPhone 13 launch, strong demand continues, with sales exceeding production. Additionally, the automotive components business, which has secured an order backlog of 10 trillion KRW, is expected to return to profitability in the second half of the year," and added, "Especially from a long-term perspective, if the Apple Car launch becomes a reality, LG Innotek is judged to be the biggest beneficiary in the Apple Car supply chain, having secured a full lineup of components optimized for autonomous driving."

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