[Click eStock] "LG Innotek, Gradual Highlighting of Q4 Profit Momentum"

Meritz Securities maintained its 'Buy' rating and target price of 390,000 KRW for LG Innotek on the 30th, anticipating that profit momentum will gradually become prominent after the iPhone 15 unveiling next month.

Yang Seung-su, a researcher at Meritz Securities, said, "The expected growth momentum for the iPhone 15 this year has only been delayed, not disappeared," adding, "We believe there is high potential demand for new models due to the reorganization of the premium-focused smartphone market, replacement demand for iPhone 11 and 12, deferred demand for iPhone 14, and upgrade demand for iPhone 8 and X."

LG Innotek's third-quarter performance this year is expected to fall short of consensus estimates. Researcher Yang explained, "LG Innotek's third-quarter sales and operating profit are expected to be 4.6 trillion KRW and 227 billion KRW, respectively, which are 3% and 15% below consensus," adding, "Yield issues with image sensors for the iPhone 15 standard and Plus models in the second half, and production disruptions of display panels for the Pro Max model are leading to an overall decline in operating rates." The anticipated foreign exchange effect is also expected to be less than forecast due to a decrease in shipment volume.

Although the third quarter may be sluggish, record-high quarterly results are expected in the fourth quarter. Researcher Yang said, "Operating profit in the fourth quarter is expected to reach 653.5 billion KRW, exceeding consensus by 12.3%, marking the highest quarterly performance ever," adding, "The usual peak shipment period for LG Innotek is October to November, but this year, high shipment volumes are expected to continue through December. Although the ramp-up speed has been slower than usual due to component supply disruptions, the planned production volume for new models in the second half remains unchanged." Meritz Securities forecasts shipments of 78.5 million units on a set basis, with 79% of the volume concentrated in the fourth quarter.

Researcher Yang projected, "Following the previous model, the shipment ratio of the Pro and Pro Max models is increasing, which is expected to benefit LG Innotek, given its high supply ratio for these models," adding, "In particular, the concentrated shipment of the Pro Max in the fourth quarter, which has a high supply price and internalization of key components, will lead to simultaneous improvements in operating rates and profitability."

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