[Click eStock] "LG Innotek, 4Q High Point with Lower Base Outlook... Buying Opportunity"

On the 25th, KB Securities maintained a buy rating and a target price of 390,000 KRW for LG Innotek, expecting this year's performance to follow a pattern of lower results in the second quarter and higher results in the fourth quarter.

LG Innotek's sales for this year are estimated to increase by 5.5% year-on-year to 20.7 trillion KRW, while operating profit is expected to decrease by 13% to 1.1 trillion KRW. The operating profit ratio for the first and second halves of the year is projected to be 15% and 85%, respectively, showing a clear pattern of lower performance in the first half and higher in the second half, with momentum strengthening in the latter half.

In particular, the estimated operating profit for the second half is expected to be 942.2 billion KRW, a 53.3% increase compared to the previous year. This is due to the anticipated rise in the average selling price of optical solutions driven by increased shipments of folded zoom camera modules, and expected cost structure improvements from the internalization of actuators. Additionally, no production disruption issues like those in the fourth quarter of last year are expected in the second half, so the increased demand for new smartphones in the latter half is analyzed to directly lead to profit growth.

Dongwon Kim, a researcher at KB Securities, explained, "Over the past five years, LG Innotek has always faced concerns about production disruptions due to component yield issues before the release of new smartphones in the second half of the year," adding, "However, looking back over the past five years, the periods of production yield improvement and concerns about production disruptions were resolved in a short time."

He continued, "Afterwards, LG Innotek's stock price showed a sharp rebound driven by performance expectations," and said, "Therefore, the current production yield concerns appearing in July seem excessive and are judged to be an opportunity to increase holdings. These production yield concerns are expected to be resolved with the start of mass production in August, and the recent excessive stock price decline provides a buying opportunity at a low price."

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