[Click eStock] "LG Innotek, High Earnings Visibility in the Second Half"

[Asia Economy Reporter Lee Jung-yoon] Hana Securities maintained its buy rating and target price of 480,000 KRW for LG Innotek on the 5th, stating that the company's second-quarter earnings this year are expected to exceed consensus estimates and that earnings visibility will remain high in the second half of the year.

LG Innotek's second-quarter revenue is projected to be 3.1881 trillion KRW, a 35% increase compared to the same period last year, and operating profit is expected to rise 87% to 283.8 billion KRW. These figures surpass the current consensus by 0.3% and 21.8%, respectively. It is estimated that the sales and operating profit of the optical solutions segment increased by 43% and 164%, respectively, compared to the same period last year, driving the strong performance. Despite the overall weak demand for IT products, the sales volume of the iPhone 13 series remained solid, with particularly strong sales of models such as the Pro and Pro Max also contributing.

LG Innotek recorded record-breaking results in the first half of the year, and its earnings visibility for the second half is also analyzed to be high. Although uncertainty remains regarding set demand and Apple is not immune to weak demand, the likelihood of earnings falling short of forecasts is considered low. This is because the assumption already factors in a 7% year-on-year decrease in iPhone shipments in the second half. Kim Rok-ho, a researcher at Hana Securities, explained, "The key point for second-half earnings is the price increase of camera modules due to the upgrade to 48-megapixel sensors," adding, "Despite a decrease in volume, the price increase of camera modules is expected to maintain high earnings visibility."

He continued, "From mid-July to mid-August, second-quarter earnings announcements from domestic and international tech companies will take place, and it is expected that annual guidance and forecasts for this year will be revised downward," adding, "Within that context, companies whose earnings actually improve will inevitably stand out."