[Click eStock] LG Innotek Expected to Contract This Year... Target Price Downgraded

On the 24th, Kiwoom Securities downgraded the target price of LG Innotek to 230,000 KRW, reflecting the revised earnings estimates. The investment rating was maintained as Outperform.

In a report released that day, Kiwoom Securities analyst Kim Sowon stated, "The consolidated sales for the third quarter grew 19% year-on-year to 5.6851 trillion KRW, operating profit decreased by 29% to 130.4 billion KRW, and operating profit margin (OPM) was 2.3%, significantly below the market consensus of 257.7 billion KRW. Optical solutions underperformed due to the won/dollar exchange rate falling short of expectations, and intensified competition in camera modules centered on folded zooms likely caused a decline in average selling price (ASP)," he analyzed.

LG Innotek's consolidated sales for the fourth quarter are expected to be 6.2122 trillion KRW, with operating profit at 325.5 billion KRW, falling short of the market consensus of 452.1 billion KRW.

Analyst Kim Sowon said, "Thanks to the launch effect of the iPhone 16, performance growth is expected compared to the previous quarter, but some camera module demand was pre-emptively reflected in the third quarter, so the seasonal peak effect is expected to be limited compared to previous years. Additionally, price competition to secure market share is expected to continue following the previous quarter."

Accordingly, this year's performance is expected to show a decline due to sluggish front-end demand and intensified competition in the second half, with sales of 20.8 trillion KRW and operating profit of 783.6 billion KRW.

Analyst Kim added, "If solid market share in high-spec products and results from new businesses become visible, earnings forecasts are expected to be revised upward."

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