[Click eStock] "LG Innotek, Strong Stock Price Even in a Bear Market... Better in the Second Half"

[Asia Economy Reporter Kwon Jaehee] DB Financial Investment maintained its 'Buy' rating and target price of 450,000 KRW for LG Innotek on the 22nd.

DB Financial Investment revised LG Innotek's operating profit for Q2 this year upward from 203 billion KRW to 252.7 billion KRW, representing a 66.4% increase compared to the same period last year.

Kwon Seongryul, a researcher at DB Financial Investment, evaluated, "Despite the sluggish smartphone market and macro uncertainties, LG Innotek is delivering better-than-expected results due to strong sales to overseas strategic customers in the Optical Solutions division, and LG Innotek's positioning of high value-added products within that."

While Optical Solutions sales fell 30% in Q2 last year compared to Q1, the decline is expected to be limited to 15% in Q2 this year. The automotive components division is also gradually improving as vehicle production increases. The weak display components are sufficiently covered by semiconductor package substrates.

Strong performance is expected to continue in the second half of the year. As overseas strategic customers prepare new models for the second half, LG Innotek is expected to become busy from August. The upper version of this new model will increase the rear camera resolution to 48M pixels, raising the average selling price (ASP) per unit. Optical Solutions is expected to see sharp performance improvements while maintaining an overwhelming market share centered on higher-end models. Optical Solutions sales are projected to rise from a quarterly average of 2.86 trillion KRW in the first half to 4.2 trillion KRW in the second half, with operating profit margins improving from a quarterly average of 7% to over 8%. The company's overall operating profit is also expected to increase from 394.3 billion KRW in Q3 to 527.5 billion KRW in Q4.

Researcher Kwon commented, "If the stock market had been better, the stock price could have risen significantly, but even in this market environment, the stock price is still showing strong performance."