[Click eStock] "LG Innotek, Best Performance in H2... Opportunity to Increase Weight"

[Asia Economy Reporter Ji Yeon-jin] KB Securities announced on the 11th that it maintains a buy rating and a target price of 540,000 KRW for LG Innotek, expecting the company to achieve its highest performance in the second half of the year.

Yu Woo-hyung, a researcher at KB Securities, stated, "Recently, LG Innotek's stock price has fallen 18% from its previous peak and 9% from the beginning of the year, which we believe reflects excessive concerns about Apple's business due to China's lockdown policies, and a rapid stock price recovery is expected." He added, "The forecasted decline in Apple's sales in Q2 due to China's lockdown policies is presumed to be caused by reduced shipments of MacBooks, iPads, and mid-to-low-end iPhones, which have low relevance to LG Innotek's performance, so the impact on LG Innotek is expected to be very limited."

LG Innotek is expected to achieve record-high performance in Q2 due to an upward revision of production plans driven by strong sales of the high-end iPhone 13 models. Q2 sales and operating profit are estimated to increase by 27% and 32% year-on-year, reaching 3 trillion KRW and 201.2 billion KRW, respectively.

Furthermore, starting from August, LG Innotek is expected to begin full-scale production of parts for the new iPhone model (iPhone 14) to be released in the second half of this year, raising expectations for a significant improvement trend in performance unlike in the past. This is because the camera specification upgrade in the iPhone 14, the first in seven years, is anticipated to lead to a price increase.

Researcher Yu emphasized, "In the past five years, LG Innotek's stock price often formed a bottom in Q2, the lowest season of the year, ahead of new product launches in the second half," adding, "Considering the high visibility of performance due to new product launches in the second half, Q2 is the right time to increase holdings."