[Click eStock] "LG Innotek Secures Long-Term Earnings Momentum with 1Q Earnings Surprise"

[Asia Economy Reporter Kwon Jae-hee] Hana Financial Investment maintained its 'Buy' rating on LG Innotek on the 5th, setting a target price of 480,000 KRW. This is due to the visibility of first-half earnings as well as the potential for further upward revisions in the second half.

Hana Financial Investment projected LG Innotek's Q1 sales at 3.8775 trillion KRW and operating profit at 358.5 billion KRW. This is a strong performance that significantly exceeds the recently rising market consensus and marks the highest quarterly earnings to date.

Researcher Kim Rok-ho of Hana Financial Investment evaluated, "While iPhone 13 sales remain solid, the relatively high proportion of the Pro lineup, which is advantageous for LG Innotek, is positive for earnings."

In the substrate materials segment, sales of display-related materials are estimated to have slowed compared to before, whereas package substrate sales are favorable, centered on 5G. However, automotive components face difficulties in sales growth due to semiconductor supply shortages, and losses are expected to continue.

LG Innotek is expected to have upward earnings momentum not only in Q1 but also in the mid-term. The strong performance of the iPhone 13 series and Pro lineup is cited as a major factor for LG Innotek's first-half earnings upgrade.

Researcher Kim said, "With the iPhone 12 and 13 series showing solid sales for two consecutive years, attention naturally turns to the next iPhone model. The volume for the second half of this year is expected to decrease by 8% compared to the previous model. However, due to the adoption of a 48-megapixel camera, the average selling price will rise, and optical solution sales in the second half are expected to increase by 10% year-on-year."

There is room for the average selling price to be revised upward from current estimates, and further price increases next year are possible, securing mid-term earnings momentum.

Researcher Kim stated, "Considering LG Innotek's momentum from next year's VR device launch and the adoption of folded zoom, it remains a top pick without any shortcomings."

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