[Market Focus] LG Innotek Weakens on Poor Earnings... Hits New Low

LG Innotek is showing weakness due to poor performance in the fourth quarter of last year. The stock hit a new 52-week low during intraday trading.

As of 9:05 a.m. on January 23, LG Innotek was trading at 153,800 won, down 7,400 won (4.59%) from the previous day. During the session, the price fell to as low as 152,200 won, setting a new 52-week low.

The previous day, LG Innotek announced that its sales for the fourth quarter of last year were 6.6268 trillion won, with an operating profit of 247.9 billion won. These figures represent decreases of 12.3% and 48.8%, respectively, compared to the same period the previous year. Park Kangho, a researcher at Daishin Securities, analyzed, "LG Innotek's fourth-quarter operating profit fell short of the consensus (the average forecast from securities firms) of 295.4 billion won," and explained, "The company posted weak results due to a weakened mix in its optical solutions, semiconductor substrate, and automotive electronics divisions, as well as additional costs being reflected."

There are forecasts that the sluggish performance may persist for an extended period. Yang Seungsoo, a researcher at Meritz Securities, stated, "LG Innotek's performance this year is expected to show negative growth, with sales declining by 6.4% year-on-year to 19.8 trillion won and operating profit dropping by 13.9% to 607.8 billion won." He explained, "For LG Innotek, which has maintained an unusually high market share among its clients, a decline in market share due to intensifying competition was an inevitable challenge. This year, it is highly likely that this will result in prolonged sluggish performance." He added, "However, the current share price is trading at a historically low level, which largely reflects the anticipated weak performance for this year. At this point, rather than worrying about further declines, it may be more appropriate to consider when a rebound in the share price could occur."