[Click e-Stock] "LG Innotek, Earnings Improvement to Accelerate in Second Half... Target Price Raised"

On September 26, Kiwoom Securities maintained its "Buy" investment opinion on LG Innotek, stating, "Earnings improvement will become more pronounced in the second half of this year, and next year is expected to see the first growth in four years, leading to a continued rebound in the stock price." The target price was raised from 210,000 won to 250,000 won.

Kim Sowon, a researcher at Kiwoom Securities, said, "The average selling price (ASP) and market share have been improving since the first quarter, which marked the bottom, and shipments of the iPhone 17 series are expected to exceed forecasts."

The upward revision of LG Innotek's second-half earnings was attributed to factors such as increased average selling prices and shipment volumes, as well as cost reduction effects. The company also analyzed that expanded production in Vietnam and reduced depreciation expenses are contributing to improved profitability.

Researcher Kim explained, "Set demand has remained stagnant, upgrades to camera module specifications have been limited, and intensifying competition with Chinese companies has continued to put downward pressure on both prices and volumes. However, ASP and market share have been improving since the first quarter, and second-quarter iPhone shipments exceeded previously lowered market expectations, creating a favorable business environment."

Next year's operating profit is projected at 802.2 billion won, a 31% increase compared to this year. The company expects to achieve its first earnings growth in four years, driven by camera module upgrades, diversification of applications for advanced semiconductor substrates such as flip chip ball grid array (FC-BGA), and new supplies of automotive components.

Researcher Kim added, "The iPhone 18 Pro series is expected to introduce variable aperture camera modules and other specification changes. LG Innotek, which holds a competitive edge in high value-added products, is likely to benefit in both price and volume."

In addition, she noted, "Next year, shipments of camera modules for humanoid robots are expected to increase about tenfold compared to this year. Improvements in utilization rates due to diversification of FC-BGA applications, mass production of automotive application processor (AP) modules, and new supplies of communication components to global automotive OEM (original equipment manufacturer) customers are expected to drive both quantitative and qualitative growth across all business divisions."

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