[Click eStock] "LG Innotek, Strong Second Half Performance Expected to Exceed Estimates"

[Asia Economy Reporter Lee Jung-yoon] Daishin Securities maintained its buy rating and target price of 520,000 KRW for LG Innotek on the 6th. Although there is a possibility of weakened sales following the launch of Apple's iPhone 14 due to the base interest rate hike trend and inflation impact, it is expected that stable initial production and the rise of the KRW-USD exchange rate will lead to strong performance in the 3rd and 4th quarters of this year.

LG Innotek's operating profit for the 3rd quarter of this year is expected to exceed consensus estimates, reaching 420.3 billion KRW. Changes in the camera applied to Apple's iPhone 14 compared to the iPhone 13 include an increase in the main camera resolution of the Pro model from 12 million pixels to 48 million pixels. Additionally, LG Innotek newly supplied the front camera, and Apple replaced the mini model in the iPhone 13 lineup with a Max model, splitting the lineup into standard and Pro models, focusing on expanding production and sales centered on the Pro. LG Innotek is analyzed to record high growth compared to the previous year due to high market share and average supply price increase in the Pro model, as well as overall market share growth.

Regarding the initial production of Apple's iPhone 14, market estimates are about 90 million units, approximately 5-6% higher than the iPhone 13, with the Pro and Pro Max models estimated to account for over 50%. As a result, operating profit for the second half of this year is expected to increase by 27.6% year-on-year to 976.8 billion KRW, exceeding estimates.

Furthermore, the iPhone 15 in 2023 is expected to newly adopt a folded camera, which is a factor for LG Innotek's average supply price increase and could lead to overall performance growth compared to this year. Kang-ho Park, a researcher at Daishin Securities, explained, "Although iPhone 14 sales may be weaker than initial targets, considering the premium-focused consumer choice and differentiated ecosystem, the impact on LG Innotek's performance is judged to be limited."

He added, "In-car camera sales within the camera segment showed significant growth in terms of amount," and "If Apple launches XR devices in 2023, LG Innotek is expected to newly supply mainly 3D sensing cameras, indicating a positive evaluation as the smartphone-centered camera sales structure gradually shifts toward in-car and XR devices."

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