[Click eStock] "LG Innotek, Lack of Demand Momentum in H1... Target Price Down"

Meritz Securities on the 26th downgraded the target price of LG Innotek from 320,000 KRW to 270,000 KRW, anticipating an extreme low first half and high second half performance trend due to the absence of demand momentum in the first half of this year. The investment opinion was maintained as 'Buy.'

Researcher Yang Seung-su of Meritz Securities said, "We lowered the fair price reflecting a 17% cut in this year's operating profit forecast," adding, "Although the valuation attractiveness is high, something more is needed for a stock price rebound."

LG Innotek's Q4 performance last year achieved the highest quarterly results but was considered disappointing. Researcher Yang analyzed, "Q4 sales exceeded the consensus (average securities firm forecast) by 5.5%, but operating profit fell short of the consensus by 1.6%. Due to increased fixed cost burdens in the optical and substrate materials divisions, operating profit was low relative to sales, and automotive components returned to a deficit due to sluggish sales caused by a slowdown in the front-end automobile industry. Overall, although the highest quarterly performance was achieved, considering deferred volumes, the results were disappointing."

Meritz Securities forecasts LG Innotek's Q1 performance at 4.3 trillion KRW in sales, down 15% year-on-year, and operating profit of 94.1 billion KRW, down 35.2%. Researcher Yang said, "Considering Foxconn's performance slowdown in December and the iPhone 15 discounts starting in January in China, it appears that production cuts due to excess inventory have begun in earnest. Also, this year lacks demand momentum in the first half, such as the 2021-2022 new model long-tail demand and deferred demand caused by Foxconn's production disruptions in 2023. We expect an extreme low first half and high second half performance trend and anticipate a performance rebound with the launch of new models in the second half."

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