[Click eStock] "LG Innotek, 3Q Expected Weakness but 4Q Max Performance Anticipated... Target Price Down"

Daishin Securities on the 27th downgraded the target price for LG Innotek from 380,000 KRW to 350,000 KRW, citing expected weak performance in the third quarter of this year. The investment rating was maintained as 'Buy.'

Park Kang-ho, a researcher at Daishin Securities, stated, "The target price downgrade is due to the third-quarter earnings expected to fall short of previous estimates and market consensus. However, the fourth quarter is anticipated to record the highest performance due to the peak season."

Daishin Securities projected LG Innotek's third-quarter revenue to decrease by 17% year-on-year to 4.47 trillion KRW, and operating profit to drop by 63.8% to 161.2 billion KRW. Researcher Park explained, "The underperformance compared to previous estimates is because the full-scale production of Apple's iPhone 15 was delayed compared to plans. Additionally, due to weak global smartphone demand, sales and operating profit from semiconductor substrates are expected to fall short of prior estimates."

Despite the third-quarter slump, the fourth quarter is expected to achieve record-high results. Daishin Securities forecasts LG Innotek's fourth-quarter revenue and operating profit at 7.15 trillion KRW and 565.6 billion KRW, respectively, representing increases of 9.3% and 233% year-on-year. Park analyzed, "Relatively favorable performance is expected among suppliers due to the increased production share of the Pro Max and Pro models, which have secured a high market share within Apple. Also, the new supply of folded zoom cameras to the Pro Max and the rise in average selling price (ASP) will act as positive factors."

He emphasized the need for a mid- to long-term approach. Researcher Park said, "Considering recent negative factors such as the Huawei issue, initial production delays of the iPhone 15, and global economic slowdown, the total sales volume of the Apple iPhone 15 is estimated to be at the level of the iPhone 14. Ultimately, it is necessary to approach with a mid- to long-term perspective reflecting next year's earnings growth and increased replacement demand for the iPhone 16, which enhances valuation attractiveness beyond the iPhone 15."

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