[Click eStock] "LG Innotek Expected to Achieve Record 4Q Performance... All Concerns Already Priced In"

On the 21st, KB Securities maintained a buy rating and a target price of 390,000 KRW for LG Innotek, stating that shipments of the iPhone 15 Pro Max camera modules are expected to increase significantly from October, leading to the highest quarterly performance this year in Q4.

The iPhone 15 Pro Max, which is experiencing both a surge in demand and supply shortages, has seen major production disruptions in key components such as displays and image sensors largely resolved since mid-month. LG Innotek's camera module shipments are showing an unusual increase as the off-season December approaches, with growth momentum expected to concentrate in the fourth quarter.

Dongwon Kim, a researcher at KB Securities, explained, "Operating profit for Q3 is expected to be 179.4 billion KRW, down 60% year-on-year due to production disruptions of the iPhone 15. However, operating profit for Q4 is projected to increase by 257% year-on-year to 606.3 billion KRW, achieving an all-time high as shipments of the iPhone 15 Pro Max camera modules rise sharply."

He added, "In particular, LG Innotek's folded zoom camera modules and in-house actuators are expected to improve both pricing and shipment volumes simultaneously, with Q4 operating profit accounting for 64% of the annual operating profit this year. The LG Innotek stock, which is currently at a 52-week low, is considered to have already priced in all concerns related to the iPhone 15, so future increases in iPhone 15 demand are expected to directly translate into improved earnings and stock price gains."

Especially, LG Display, an affiliate, recently completed final approval for OLED (organic light-emitting diode) panels for the iPhone 15 Pro Max, and it is analyzed that more than 20 million OLED panels will be shipped in Q4 alone. Accordingly, the supply volume of the iPhone 15 Pro Max is expected to increase significantly from October, greatly alleviating the supply shortage of distribution volumes going forward.