[Click eStock] "LG Innotek, 2Q Bottom Passed, H2 Earnings Stability... Target Price Up"

DS Investment & Securities maintained its 'Buy' rating on LG Innotek on the 4th and raised the target price from 360,000 KRW to 390,000 KRW.

LG Innotek's expected Q2 earnings are projected to surpass market consensus with sales of 3.56 trillion KRW and operating profit of 20.8 billion KRW. Although Q2 is typically a period when demand rebounds are difficult due to an increase in waiting inventory for new models, favorable exchange rates and a solid market share of the iPhone in the Greater China smartphone market are expected to reduce the optical solutions segment's deficit from the previous 85.1 billion KRW to approximately 21.3 billion KRW. For the substrate materials segment, mass production for North American clients began in earnest in June, leading to a slight improvement of 7.7% compared to Q1.

LG Innotek logo

LG Innotek's expected performance for the second half of the year forecasts sales of 12.7 trillion KRW and operating profit of 919.8 billion KRW, representing increases of 6.8% and 49.6% year-over-year, respectively. The normal shipment plans of North American clients and the yield of folded zoom actuators are expected to be better than concerns, with no issues anticipated in the normal mass production schedule.

Researcher Kwon Tae-woo of DS Investment & Securities stated, "The possibility of profit normalization in the second half is considered high," adding, "LG Innotek has decided to invest 1.3 trillion KRW to expand camera production capacity in Vietnam, which is expected to be encouraging for future production efficiency and maintaining market share, representing an investment decision that defends against downside risks to mid- to long-term profits."

Researcher Kwon also added, "Although stock price volatility is expected depending on the strength of future iPhone sales, LG Innotek shows relatively stable performance among large electrical and electronics stocks in the second half."

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