[Click eStock] "LG Innotek Expected to Achieve Record Q4 Performance... Optical Business Up"

[Asia Economy Reporter Myeonghwan Lee] IBK Investment & Securities stated on the 27th that it expects LG Innotek to perform well in the optical solutions sector, maintaining a buy rating and a target price of 415,000 KRW.

Kim Unho, a researcher at IBK Securities, evaluated, "The expected operating profit scale in optical solutions exceeds 900 billion KRW annually, and the stock price is considered to be in a valuation range relative to performance."

LG Innotek's sales in the fourth quarter of 2021 were 5.7231 trillion KRW, and operating profit was 429.8 billion KRW, increasing by 50.7% and 28% respectively compared to the previous quarter. Sales increased significantly more than the initial market forecast. Although operating profit was also the highest ever for a quarter, it decreased compared to previous forecasts due to the impact of bonus payments.

IBK Securities analyzed that the optical solutions division led the sales increase in the fourth quarter of last year. Sales of the substrate materials division were similar to the previous quarter, and the automotive components division saw a 13.1% increase in sales due to the base effect, explained researcher Kim. The improvement in operating profit was also led by the optical solutions division. The profits of the other divisions decreased compared to the third quarter.

IBK Securities forecasted the company's sales for the first quarter of this year to be 3.7581 trillion KRW and operating profit to be 339 billion KRW, which are decreases of 34.3% and 21.1% respectively compared to the previous quarter. The sales decline is expected to be led by the optical solutions division. While the substrate materials division is expected to maintain its performance, the automotive components division is predicted to decrease by 39.3% compared to the previous quarter, according to IBK Securities.

Researcher Kim stated, "The exceptionally high operating profit level of the first quarter last year is expected to be achievable in 2022 as well," and added, "The underperforming automotive components division is also expected to return to operating profit in the second half of this year."