MERITZ Securities analyzed on the 26th that LG Innotek will experience worsening seasonal off-peak impacts due to tariff issues in the second quarter and a slowdown in demand for the iPhone 17 series in the second half, leading to poor performance this year. However, it noted that after next year, demand for iPhone replacement is expected to strengthen, resulting in improved performance. The target stock price is 180,000 won, and the investment opinion remains "buy."
LG Innotek's estimated revenue for the second quarter is 3.6 trillion won, with an estimated operating profit of 36.4 billion won. The projections are expected to fall short of market expectations (consensus) by 8% and 44.3%, respectively.
Yang Seung-soo, a researcher at MERITZ Securities, stated, "It appears that the seasonal off-peak effects in the second quarter have intensified compared to previous years due to the demand that arose in the first quarter. Furthermore, a price mismatch occurred because finished goods were shipped during a low exchange rate period based on materials and supplies procured during a high exchange rate period, which is expected to have a negative impact on profitability."
The outlook for the second half is also not bright. Major customer Apple has announced the upcoming release of foldable phones next year, leading to expectations of sluggish demand for the iPhone 17, which is set to launch in the second half of this year. Production volume of this year's new iPhone model is estimated at 80 million units, with shipments expected to reach 76 million units, falling short of last year's levels.
However, there is still a possibility of performance improvement as demand for smartphone replacements begins to emerge in the second half. The decision to adopt new technologies, including under-display cameras, is also expected to positively impact LG Innotek, which is ahead in technological competition.
Researcher Yang noted, "If the market's focus shifts from areas of concern in the second half of this year to areas of expectation for next year, the stock price may gain momentum," and that "we are approaching a time when proactive responses in consideration of a rebound point are needed."