[Click eStock] “LG Innotek, Expanding Customer Base to Big Tech”

Optical and Communication Technologies Core to Autonomous Driving and Metaverse... LG Innotek Holds Both Simultaneously
KB Securities "LG Innotek Target Price Raised from 400,000 KRW to 500,000 KRW"

[Asia Economy Reporter Gong Byung-sun] There is a growing view that LG Innotek's customer base will expand from the existing Apple-centric focus to big tech companies. Metaverse and autonomous driving are expected to drive growth.

On the 14th, KB Securities maintained a 'Buy' rating on LG Innotek while raising the target price by 25% from the previous 400,000 KRW to 500,000 KRW. The closing price on the previous day was 352,500 KRW.

LG Innotek's technological capabilities are expected to generate growth. LG Innotek's optical and communication technologies are essential for autonomous driving and the metaverse. It is evaluated that LG Innotek is the only company possessing both simultaneously. Based on this, the customer base is expected to expand from being Apple-centric to include big tech companies such as Microsoft, Google, and Meta.

The business potential of LG Innotek's automotive components division is expected to be greater than anticipated. Dongwon Kim, a researcher at KB Securities, stated, "LG Innotek will be able to supply optimized component solutions for autonomous vehicles in the future by securing a diverse range of automotive component products, including LiDAR and V2X systems," and added, "The expansion of the customer base centered on 20 global automobile companies is also expected to grow."

Furthermore, Mobileye, an Intel subsidiary planning an initial public offering (IPO) on the New York Stock Exchange this summer, is expected to contribute to the activation of autonomous driving projects through fundraising after listing. This is also anticipated to be a new order opportunity for LG Innotek.

Meanwhile, KB Securities estimated LG Innotek's sales this year to increase by 8% year-on-year to 15.2 trillion KRW, and operating profit to rise by 12% during the same period to 1.4 trillion KRW. Researcher Kim explained, "The automotive components division, with an order backlog of 10 trillion KRW, is expected to turn profitable from the second half of the year due to the completion of order normalization work," and added, "The semiconductor substrate business, which is expected to face supply shortages for three years, is experiencing simultaneous sales growth and margin improvement."