[Click eStock] "LG Innotek, iPhone Order Increase... Expecting Record Sales This Year"

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] KB Securities announced on the 8th that it maintains a target price of 570,000 KRW and a buy rating for LG Innotek, expecting record-high sales due to a significant increase in iPhone orders in the fourth quarter and an expansion in the market share of the high-end Pro series models.

Yu Woo-hyung, a researcher at KB Securities, explained, "From September to December this year, the initial shipment volume of the iPhone 14 is expected to be 93 million units, with the high-end Pro series accounting for 58%, the largest scale ever, which will further strengthen the benefits for LG Innotek, which focuses on the Pro series." He added, "The reason for the aggressive expansion of high-end model production despite the iPhone 14's premium pricing policy is that there is virtually no competitor to the iPhone 14 in the global market from 2022 to 2023, and the global economic recession and inflation are not significantly affecting the demand for high-end iPhone models."

LG Innotek is expected to achieve an operating profit of 1 trillion KRW in the second half of the year, a 25% increase compared to the same period last year, due to the expansion of the iPhone 14 Pro series market share, an increase in average unit price from higher camera pixel counts, and new supply of front cameras. Additionally, second-half optical solutions sales (accounting for 80% of iPhone sales) are expected to increase by 12% to 8.6 trillion KRW, making optical solutions account for 59% of total sales this year.

Accordingly, operating profits for the third and fourth quarters are expected to rise by 25% and 26% year-on-year to 418.8 billion KRW and 540.3 billion KRW, respectively. Researcher Yu said, "LG Innotek's stock price has undergone sufficient adjustment over the past eight months, falling to about six times the price-to-earnings ratio (PER). However, considering the record-high performance forecast for the second half due to the surge in iPhone orders in the fourth quarter and the accelerated expansion of new businesses such as mixed reality (MR) and autonomous driving (ADAS), the stock price adjustment is expected to come to an end."

In particular, LG Innotek's automotive components division, which has secured an order backlog of 12 trillion KRW, is expected to achieve a performance turnaround for the first time in seven years next year. Furthermore, it currently supplies key components for autonomous vehicles such as Camera, LiDAR, Radar, and V2X (Vehicle to Everything) to 30 global automobile companies, and supply expansion to North American electric vehicle manufacturers and autonomous vehicle companies is anticipated from next year.

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