[Click eStock] "LG Innotek, 3Q Slump Due to iPhone Supply Disruption... Target Price Down"

Korea Investment & Securities lowered the target price for LG Innotek from 410,000 won to 360,000 won on the 20th. However, the investment rating was maintained at 'Buy.'

LG Innotek is estimated to record sales of 4.48 trillion won and an operating profit of 177.1 billion won in the third quarter. This represents a decrease of 16.8% and 60.2%, respectively, compared to the same period last year, significantly missing market expectations. This was due to supply disruptions of components such as camera and display modules during the peak iPhone seasons in the third and fourth quarters. Accordingly, the performance of business units related to optical solutions and substrate materials for the new iPhone models is expected to be weaker than anticipated.

However, a strong rebound in performance is expected in the fourth quarter. Korea Investment & Securities estimates LG Innotek’s fourth-quarter sales at 7.07 trillion won and operating profit at 556.9 billion won. Supply disruptions for the iPhone Pro Max model, which LG Innotek is focusing on, are being resolved quickly, and the proportion of Pro Max models within the iPhone series is also increasing. The iPhone 14 Pro Max ranked first in global sales in the first half of this year.

The shipment volume of the iPhone 15 in the second half of this year is expected to reach 74.4 million units, a 5.7% increase compared to last year’s 70.4 million units. Although IT demand recovery remains slow, growth is expected to be achievable thanks to the base effect from last year.

Researcher Cho Cheol-hee of Korea Investment & Securities said, "iPhone-related performance will increase year-over-year from the third quarter as the bottom, continuing for the next year," adding, "We recommend buying at this industry and performance inflection point."

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