[Click eStock] "LG Innotek, Growing Together with Optical Solutions"

Rebound Expected Next Year Driven by Apple New Products Growth
Hana Financial Investment "LG Innotek Target Price Raised from 320,000 KRW to 415,000 KRW"

[Asia Economy Reporter Gong Byung-sun] LG Innotek is expected to post fourth-quarter results this year that exceed market consensus, driven by its optical solutions division. Next year, it is anticipated to grow by leveraging Apple's new products as a growth engine.

On the 23rd, Hana Financial Investment estimated LG Innotek's fourth-quarter sales to increase by 27% year-on-year to KRW 4.8769 trillion, and operating profit to rise by 34% to KRW 456.9 billion. The operating profit is about 3.94% higher than the consensus.

The optical solutions division is expected to contribute to the performance. Amid a favorable exchange rate environment, sales of new models to North American clients are strong, and LG Innotek's market share is expanding. Kim Rok-ho, a researcher at Hana Financial Investment, explained, "LG Innotek's market share expansion is related to capacity expansion," adding, "The package substrate division is also expected to achieve solid results due to increased shipments to North American clients."

Next year, LG Innotek's sales are estimated to increase by 4% compared to this year, reaching KRW 14.6395 trillion, and operating profit is expected to rise by 3% to KRW 1.3275 trillion. Initially, Hana Financial Investment anticipated a decline in LG Innotek's performance next year due to a base effect. However, strong sales and market share expansion of Apple's iPhone 13 series in the first half of next year, along with price increases driven by higher camera pixel counts in the next iPhone model in the second half, are expected to boost performance.

Accordingly, Hana Financial Investment maintained its "Buy" rating on LG Innotek. The target stock price was raised from KRW 320,000 to KRW 415,000. Researcher Kim said, "With the upward revision of the optical solutions division's performance, the annual results have also shifted direction," adding, "The current stock price is interpreted as moving out of the extreme undervaluation zone as concerns over profit decline next year change to profit growth." The closing price on the previous day was KRW 335,500.