LG Innotek to benefit most from iPhone 6
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By Bahk Eun-ji
LG Innotek is expected to benefit most from the U.S. tech giant’s release of two new iPhones, analysts said Friday.
LG Innotek shares posted a modest correction Friday, following recent gains. It closed down 0.37 percent at 133,500.
But analysts were bullish about the outlook for the stock.
Apple released two new models ― a 4.7-inch iPhone 6 and 5.5-inch iPhone 6 Plus, Wednesday.
Kim Rok-ho, an analyst of Hana Daetoo Securities, expects the global shipping of iPhone 6 to be around 80 million units this year.
He said LG Innotek, which supplies camera modules and other parts to Apple, will benefit from the increase in shipments of iPhones.
Apple’s total global shipments of iPhones, including the new models, are expected to grow nearly 20 percent in the second half of this year, when compared to the first half, Kim said.
“This suggests LG Innotek’s earnings will gain faster momentum in the second half,” Kim said.
Sophia Kim, an analyst at Woori Securities, also expects to see an increase in the value of the two LG affiliate stocks.
“LG Innotek started supplying camera modules and printed circuit boards (PCB) for use in the iPhone 6 in August, and the company’s supply for the new model should pick up in earnest from this month,” she said in her report.
Sophia Kim said she foresees a greater-than-expected earnings improvement at LG Innotek’s light emitting diode (LED) arm.
She expects the company to post 106 billion won in operating profit in the third quarter, up 91 percent from a year earlier, boosted by the rise in the supply of parts to Apple.
Kim maintained the stock’s target price at 177,000 won, reflecting a strong earnings outlook.
“Given that LG Innotek is a supplier for the iPhone 6, the firm will be a primary beneficiary of the launch, and it will capture a greater market share in China’s mobile parts market from 2015 as well,” Kim said.
Ha Jun-doo, a researcher at Shinhan Investment, also said LG Innotek will be the biggest beneficiary of the Apple’s new models. He anticipates the company’s sales will top 2 trillion won this year for the first time.
LG Display, a supplier of liquid crystal displays (LCD) for iPhone models, is also a main beneficiary, analysts said.
But they said the company’s gains will not be as strong as LG Innotek’s, as the stock has already factored in the positive effect of new iPhone models.