[Click eStock] "LG Innotek, Expected Record Quarterly Performance in Q4"

IBK Investment & Securities Report
Target Price Raised by 38%

[Asia Economy Reporter Minji Lee] IBK Investment & Securities maintained a buy rating on LG Innotek on the 25th, expecting record-high quarterly earnings in the fourth quarter, and raised the target price by 38% from the previous level to 415,000 KRW.

LG Innotek's fourth-quarter sales are expected to reach 4.9719 trillion KRW, a 30.9% increase compared to the third quarter. The sales growth is predicted to be led by the optical solutions segment. Substrate materials are expected to see slight growth, and automotive components are anticipated to increase by about 7% due to a low base effect.

Operating profit is projected to increase by 26.7% to 452.5 billion KRW. Kim Unho, a researcher at IBK Investment & Securities, explained, "With record-high quarterly earnings, growth will be driven by optical solutions," adding, "Profits from other business units are expected to decline."

Concerns about LG Innotek are mainly condensed into two points: high customer dependency and limited growth. Because of this, the company has consistently maintained one of the lowest valuations within the sector, but in hindsight, the situation has unfolded differently from the market's judgment. Researcher Kim Unho analyzed, "The high customer concentration ultimately became a decisive reason for growth," and "They are also creating additional growth potential on their own."

The optical solutions division is expected to see significant performance improvement with the launch of new models by overseas customers. Negative impacts from changes in customers' purchasing methods are expected to be minimal, and next year, performance improvement is anticipated to continue with average selling price increases and the addition of new products. Researcher Kim Unho stated, "With normalized seasonality, fourth-quarter results are expected to increase compared to the third quarter, showing differentiated performance momentum within the IT sector," and added, "The underperforming automotive components division is also expected to turn profitable in the second half of next year."

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