[Click eStock] "Autonomous Vehicles Growing 40% Annually, Top Beneficiary is LG Innotek"

[Asia Economy Reporter Myunghwan Lee] KB Securities announced on the 7th that it maintains a Buy rating and a target price of 500,000 KRW for LG Innotek. This is because LG Innotek is expected to have a competitive advantage by securing related technologies in the autonomous vehicle market, which is growing at an annual rate of nearly 40%.

According to Navigant Research, a market research firm, the global autonomous vehicle market is expected to expand from 8 trillion KRW in 2020 to 1,300 trillion KRW by 2035, showing an annual growth rate of 40%. The expansion of electric vehicles, advancement in driving technologies, low accident rates, and rapid technological evolution are enabling this high-speed growth. Global automakers such as Mercedes-Benz, BMW, Audi, and Hyundai Motor Company have announced plans to release autonomous vehicles equipped with 'Level 3' (conditional automated driving) technology starting in the second half of this year. KB Securities expects the Level 3 autonomous vehicle market to fully blossom from next year.

LG Innotek is evaluated to have secured supply capabilities and core technologies related to autonomous vehicles. According to KB Securities, LG Innotek is estimated to be able to supply key autonomous vehicle components such as cameras, LiDAR, and radar to more than 20 global automakers. KB Securities analyzed that LG Innotek is the only automotive parts company that possesses both optical and communication technologies by having 5G-based Vehicle to Everything (V2X) communication technology.

KB Securities analyzed that LG Innotek is expected to return to profitability in the second half of this year, marking a performance turnaround after six years. The current order backlog for LG Innotek’s automotive parts business is 10 trillion KRW, with new orders increasing by 3 trillion KRW annually. LG Innotek, currently supplying vehicle cameras to Tesla, is expected to be the biggest beneficiary due to increased volume and price hikes regardless of the direction of autonomous driving technology development. This is because the number of cameras installed per autonomous vehicle is expected to double with technological advancements. The average selling price of vehicle cameras is also estimated to be nearly three times higher than that of smartphone cameras.

Dongwon Kim, a researcher at KB Securities, said, "Following the IPO of Mobileye, an Intel subsidiary, scheduled for this summer on the New York Stock Exchange, the activation of autonomous driving projects through fundraising is expected," adding, "This is expected to act as a factor for new order opportunities for LG Innotek’s autonomous driving components in the future."

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