LG Innotek, the wing of the electrical equipment business… The first ever ’10 trillion in sales and 1 trillion won in operating profit’

Input 2021.03.12 06:00

LG(003550)The group produces camera modules for smartphone cameras, battery control management systems (BMS), and advanced driver assistance systems (ADAS). LG Innotek (011070)Stock prices are predicting that this year’s first sales and operating profit will exceed KRW 10 trillion and KRW 1 trillion. It is analyzed that it will drive operating profit as the electronic parts business, which has recorded a large-scale deficit, is expected to turn to the black.

Taking the consensus of securities firms on the 12th, LG Innotek is expected to record 2,644.9 billion won in sales and 2203 billion won in operating profit in the first quarter of this year. This is an increase of 31.53% and 59.64%, respectively, compared to the same period last year.

Recently, as LG Innotek’s flagship optical solution division (camera module) and new business, electronic equipment division, are expected to continue robust growth, some securities companies are raising their earnings outlook. Kiwoom Securities (039490)Forecasted LG Innotek’s 1Q operating profit to increase by 78% year-on-year to KRW 312.1 billion.

What is paying attention in the market is whether LG Innotek will achieve sales of 10 trillion won and operating profit of 1 trillion won this year. Last year, LG Innotek recorded 9,5418 billion won in sales and 681 billion won in operating profit, rewriting its record-high performance. This is an increase of 19.64% and 42.95%, respectively, compared to the previous year.

If this growth continues, it is expected to achieve sales of 10 trillion won this year. In particular, the camera module, the flagship industry, is expected to see remarkable growth compared to the previous year. 80% of LG Innotek’s sales come from camera modules. 60-70% of camera module sales come from US IT company Apple. According to LG Innotek’s audit report, last year’s sales from Apple were 6.46 trillion won. Securities companies predict that Apple’s smartphone shipments will record 218.82 million units this year. This is the highest since 2015. LG Innotek’s earnings are also expected to improve.

The electrical equipment business, which recorded a deficit for three consecutive years, is sure to turn into a surplus in the second half of this year. LG Innotek is producing automotive parts such as battery control systems (BMS), advanced driver assistance systems (ADAS) cameras, DC-DC converters, and vehicle objects (V2X) sensors, which are parts for electric vehicles.

Last year’s net losses of LG Innotek’s Poland and Mexico subsidiaries were 13.8 billion won and 24.4 billion won, respectively. These subsidiaries are overseas subsidiaries that operate electronic components.

Overseas subsidiaries of electronic parts and parts recorded a loss, but the total operating loss of the electronic parts business was KRW 38.9 billion, down from KRW 51.9 billion a year earlier. During the same period, sales increased 4.9% to KRW 1,1873 trillion. The stock market predicts that it will succeed in turning profits with sales of 1.3 trillion won this year in the electronic parts division.

Park Kang-ho, a researcher at Daishin Securities said, “LG Electronics (066570)“In the process of strengthening electronic parts such as partnerships with Magna, LG Innotek’s electronic parts orders will increase, thereby increasing its competitiveness,” he said.