[Click eStock] "LG Innotek, Earnings Turnaround Expected in Second Half of This Year for the First Time in 6 Years"

[Asia Economy Reporter Kwon Jae-hee] KB Securities maintained its investment opinion of 'Buy' and target price of 540,000 KRW for LG Innotek on the 3rd.

LG Innotek is reportedly considering expanding its automotive parts factory in Mexico, raising expectations for North American supply. Currently, LG Innotek's automotive parts business has seen new orders increase by an average of 3 trillion KRW annually, with an order backlog of 10 trillion KRW secured. A performance turnaround is expected in the second half of this year for the first time in six years. In particular, LG Innotek supplies cameras, LiDAR, radar, and other components?referred to as the "eyes" of autonomous driving?to 25 global automobile manufacturers. It also possesses V2X system technology, a 5G communication technology between autonomous vehicles and objects, making it the only automotive parts company to simultaneously secure optical camera technology and 5G communication system technology.

Benefits from reopening are also anticipated. Despite a global decline in smartphone demand, high-end iPhone models (such as iPhone 13 Pro and iPhone 13 Pro Max) have continued to show exceptional sales momentum even nine months after their release, suggesting potential benefits from reopening in the future. This is because high-end iPhone models are less affected by inflation and economic downturns. Especially, LG Innotek's performance is expected to be better next year than this year, as the iPhone 14, to be released this year, is expected to see a double-digit price increase due to higher pixel counts, and the iPhone 15, to be released next year, is expected to have internalization of key components and additional price increases for camera modules.

Dongwon Kim, a researcher at KB Securities, stated, "LG Innotek has secured clear performance visibility due to the effects of new iPhone products in 2022 and 2023, and as the camera module business expands from iPhones to autonomous vehicles, the automotive camera business is expected to turn profitable soon due to the expansion of the camera business." He added, "Following the lifting of COVID-19 lockdowns, there is also potential demand for upgrading to iPhones equipped with high-spec cameras for photography in anticipation of reopening and travel plans."

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