LG Innotek’s earnings from the fourth quarter will decline as its major client Apple faces slower-than-expected sales, said Hana Financial Investment on Dec. 4 lowering the target price to 150,000 won (US$134.89) from 140,000 won.
Its revenue in the fourth quarter will fall 10 percent on-year to 2.78 trillion won while operating profit will rise 6 percent to 137.8 billion won. Its earnings prospects for the first half of next year will also have to be lowered. However, compared to this year’s first half when its optical solution sector suffered a loss due to inventory shuffle of iPhone X, profits will increase, said analyst Kim Rok-ho.
The earnings expectations for the second half of 2019 still remain valid. It is likely that Apple’s new model will be equipped with triple cameras, which will boost revenue of LG Innotek’s optical solution up 21 percent from the same period this year. As its current stock price already reflects lowered earnings prospects, it is unlikely to slide down further, added the analyst maintaining a “buy” recommendation.