[Click eStock] "LG Innotek, Earnings Surprise Expected Despite Off-Season"

[Asia Economy Reporter Lee Jung-yoon] NH Investment & Securities maintained a buy rating and a target price of 600,000 KRW for LG Innotek on the 17th, citing an earnings surprise in the second quarter of this year and expectations for further performance improvements in the second half.

LG Innotek's second-quarter sales and operating profit are expected to exceed consensus estimates by 16.1% and 20.4%, respectively. Additionally, considering the recent rise in the KRW-USD exchange rate, there is a high possibility of further profit expansion. Recording sales in the off-season second quarter similar to those in the third quarter of last year suggests rapid progress in expanding market share within client companies and improving the product mix.

Lee Gyu-ha, a researcher at NH Investment & Securities, explained, "The main reason for the strong performance is that the unit price of camera modules is relatively high, and the expansion of high-end smartphone sales, including rear 3D sensing, resulted in a higher-than-expected price per unit. The trend of expanding market share among North American clients continues, and sales and profitability in the automotive sector have improved due to the easing of semiconductor supply constraints for vehicles."

It is particularly positive that LG Innotek recorded an earnings surprise during the off-season when smartphone demand and volume decrease. Upon entering the peak season in the second half, the effects of mix improvement and market share expansion are expected to be maximized, potentially leading to greater profit growth than anticipated.

The researcher added, "In addition to camera modules, the improvement in the automotive sector, which had been recording losses, is also positive. As the semiconductor supply shortage eases in the second half, a performance turnaround is expected, and in the mid to long term, growth is anticipated to continue through the supply of cameras and Lidar modules for autonomous vehicles."

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