[Click e-Stock] "LG Innotek, Sufficient Room for Further Gains"

[Asia Economy Reporter Oh Ju-yeon] KB Securities stated on the 29th that despite the recent rise in LG Innotek's stock price, there is still ample room for further increase.

Researcher Kim Dong-won mentioned, "According to recent media reports, LG Innotek is expected to fully implement an exit strategy from loss-making businesses by discontinuing the production of LED chips and packages for lighting, as well as halting the thermoelectric module business. It appears that LG Electronics has transferred its entire vehicle lamp business under the automotive parts solution (VS) division, which was acquired in 2018, to the Austrian automotive lighting company ZKW." He added, "In particular, LG Innotek is focusing on automotive LED, and it is expected that synergy effects can be created through collaboration with ZKW in the future." He further forecasted, "Accordingly, LG Group's automotive parts business is expected to achieve efficient specialization in next-generation automotive technologies such as autonomous driving through selective focus by division."

The analysis suggests that there is sufficient potential for further stock price increases for LG Innotek.

Researcher Kim explained, "Over the past 10 years, when the camera functions of major customers' new products changed, LG Innotek's operating profit increased by an average of 150 billion KRW annually (achieving an increase of 191.7 billion KRW in operating profit in 2017 compared to the previous year). Additionally, due to structural efficiency improvements in loss-making businesses, a practical profit increase effect of 150 billion KRW is also expected."

He also stated, "Considering that LG Innotek's valuation rose to a PBR of 2.1 to 2.3 times when major customers' new product camera functions changed, along with the forecast of record-high performance, long-term performance improvement effects from business efficiency, and the current valuation (2020E PBR 1.4 times), despite the recent stock price increase, there is still sufficient room for further growth."

This content was produced with the assistance of AI translation services.