[Click eStock] "LG Innotek to Achieve Record-Breaking Q4 Performance"

Hana Financial Investment Report
LG Innotek Q4 Operating Profit Forecast of 327.1 Billion KRW

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating and a target price of 220,000 KRW for LG Innotek on the 15th, expecting the company to deliver record-high earnings in the fourth quarter.

In the third quarter, LG Innotek's sales are expected to be 1.8876 trillion KRW and operating profit 99.2 billion KRW, down 23% and 47% respectively compared to the same period last year. This is because sales of optical solutions are estimated to decrease by 28% year-on-year due to delays in new model launches by North American clients. The substrate materials division is expected to continue strong performance with a 6% increase in sales compared to the previous quarter, driven by favorable package substrate demand and the peak season for 2 Metal COF.

In the fourth quarter, LG Innotek's sales are estimated to have increased by 21% year-on-year to 3.5757 trillion KRW. Operating profit is expected to have risen 56% to 327.1 billion KRW during the same period. Both sales and operating profit represent record highs. Operating profits in 2017 and 2018 were 296.2 billion KRW and 263.5 billion KRW respectively, so the quarterly profit is expected to surpass the annual operating profit.

Rokho Kim, a researcher at Hana Financial Investment, said, "This will once again prove that LG Innotek is at the forefront of benefiting from the specification upgrades of camera modules and the addition of sensing modules." He added, "The camera module equipped with the top-tier model has been upgraded with sensor shift and 2.5x optical zoom, which likely increased the price of the camera module." Furthermore, he analyzed that sales per smartphone unit may have increased due to the supply of new sensing modules.

Finally, Researcher Kim explained, "Despite annual issues regarding diversification of suppliers, LG Innotek's position has remained stable due to good mutual responsiveness with customers," and added, "It is reasonable to focus on achieving record-high performance in the short term."