[Click eStock] "LG Innotek, Positive Performance Expected in Second Half... Q1 as Stock Price Bottom"

Positive Performance in Second Half of 2024
Successful Trend Reversal from Operating Profit Downgrade to Upgrade
Profitability Improved Due to Camera Unit Price Increase

Daishin Securities analyzed LG Innotek on the 22nd as positive from the perspective of performance and valuation in the second half of 2024. They maintained a 'Buy' investment rating and a target price of 310,000 KRW. Daishin Securities' closing price on the 21st was 202,000 KRW.

Researcher Park Kang-ho of Daishin Securities stated, "The downward trend in operating profit and earnings per share for 2023 and 2024 due to delays in iPhone 15 production and sales slowdown appears to have ended," adding, "The bottom of the performance is expected in Q2 2024, but the stock price bottom is judged to be in Q1." LG Innotek's Q1 2024 revenue and operating profit are expected to be 4.46 trillion KRW and 150.5 billion KRW, respectively. The operating profit is 48% higher than the consensus (market average forecast). LG Innotek manufactures and supplies key components for the iPhone.

Researcher Park said, "The basis for the upward revision of operating profit is that the profitability of the camera module has improved due to the high sales proportion of the iPhone Pro Max, new supply of folded zoom cameras and actuators (first reflected in sales in Q4 2023), and the increase in pixel count (48 million) of the general model," adding, "The average exchange rate of KRW to USD (as of the 20th) at 1,328 KRW, which is 5.3% above the base rate, will also contribute additionally to profitability improvement."

Due to the seasonal characteristic of weakening iPhone sales, Q2 2024 performance is expected to be sluggish. Researcher Park said, "We expect stable profitability through an increase in average selling price (ASP) and yield improvement rather than an increase in iPhone 16 sales in 2024," adding, "The supply of folded zoom cameras has increased to two models (Pro Max, Pro), and actuator supply is also expected to increase accordingly." Since actuators are internalized components, they are expected to contribute more to operating profit margin improvement than to sales. The iPhone 16, to be released in the second half of this year, mainly focuses on hardware function upgrades. Normal yield acquisition and an increase in the average supply price per camera module are expected.

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