[Click eStock] "Steady iPhone Sales... LG Innotek 2Q Performance Also 'Reassuring'"

Operating Profit Expected to Surpass 1 Trillion Won This Year... Forecasted to Be 'Record High'

[Asia Economy Reporter Minwoo Lee] LG Innotek is expected to post solid results in the second quarter of this year. This is because the sales of Apple’s iPhone products, a key customer, continue to perform well, leading to anticipated strong performance from the Optical Solutions division. However, the automotive components segment is expected to be somewhat sluggish.

On the 15th, Hana Financial Investment forecasted that LG Innotek would record sales of 2.2518 trillion KRW and an operating profit of 131.8 billion KRW in the second quarter of this year. These figures represent upward revisions of approximately 6.8% and 19.3%, respectively, compared to previous estimates. Compared to the same period last year, sales are expected to increase by 49% and operating profit by 141%.

Researcher Rokho Kim of Hana Financial Investment explained, "We raised the sales forecast for the Optical Solutions division by 12% and operating profit by 89% compared to previous estimates. This is because the iPhone 12 series continues to show strong sales, and particularly the iPhone 12 Pro Max accounts for a high proportion, which significantly benefits LG Innotek."

However, the automotive components segment is expected to slow down somewhat. This is due to anticipated shortages in automotive semiconductor supply and increased related costs. Researcher Kim projected, "The automotive components division posted a 3% operating profit margin in the first quarter of this year, but profitability is expected to deteriorate to around the break-even point in the second quarter."

The first half of this year is expected to record an all-time high in performance. Sales are estimated at 5.3221 trillion KRW and operating profit at 478.7 billion KRW, representing increases of 53% and 108%, respectively, compared to the same period last year. Both sales and operating profit are the highest ever for the first half of a year. Based on this, annual sales are projected to reach 11.8945 trillion KRW and operating profit 1.0293 trillion KRW, marking the highest performance in history. Researcher Kim assessed, "While the strong sales of the customer’s smartphones have an impact, ultimately LG Innotek’s role within that ecosystem is continuously expanding, driving growth in performance. Although the supply structure for camera modules will change starting in the second half of this year, LG Innotek’s position and competitiveness in handling the highest specifications will remain unchanged."

Against this backdrop, Hana Financial Investment maintained its 'Buy' rating and target price of 270,000 KRW for LG Innotek. The closing price on the previous day was 219,000 KRW.