[Click eStock] "LG Innotek, iPhone Replacement Demand Expected to Improve Second Half Performance"

[Asia Economy Reporter Kwon Jaehee] Hyundai Motor Securities maintained a 'Buy' rating on LG Innotek on the 23rd, setting a target price of 430,000 KRW.

LG Innotek's second-quarter sales are expected to reach 3 trillion KRW, with an operating profit of 206 billion KRW. This represents a decrease of 23.2% and 43.9% respectively compared to the previous quarter, mainly due to a decline in sales of the iPhone 13 series.

However, despite macroeconomic concerns, the year-on-year performance is improving because premium smartphones like the iPhone are less affected by reduced disposable income caused by high inflation. It is estimated that Chromebooks, low-cost notebooks, and low-cost smartphones are more significantly impacted by macroeconomic factors compared to premium products.

In the second half of the year, a strong upward trend is expected, with sales projected to increase by 32% compared to the first half, reaching 9.2 trillion KRW. The iPhone 14 Pro and Pro Max models, expected to launch in the third quarter, will feature an upgraded rear camera from 12 megapixels to 48 megapixels based on the 4nm A16 chip, which is likely to stimulate replacement demand. In particular, increasing camera resolution to meet reopening and travel demand is expected to satisfy consumers who want to take high-resolution photos and videos.

Researcher Noh Geun-chang of Hyundai Motor Securities stated, "Following a sharp performance improvement and stock price revaluation, the stock price is currently adjusting due to entering the off-season," adding, "A buy and hold strategy based on capturing the bottom is effective."