[Click eStock] "LG Innotek, Brilliant Performance...Reason Behind the Stock Price Surge"

[Asia Economy Reporter Ji-hwan Park] DB Financial Investment evaluated on the 17th that there seem to be clear reasons, including a series of strong earnings, behind the recent upward trend in LG Innotek's stock price.

Seongryul Kwon, a researcher at DB Financial Investment, said, "There are reasons why the consensus keeps rising," adding, "The consensus for LG Innotek's operating profit in the fourth quarter of this year has continuously increased, reaching 442 billion KRW," and "Considering the current fundamentals, there is a possibility it could exceed this." This contrasts with other major IT companies whose fourth-quarter consensus is either stagnant or declining during the same period.

Researcher Kwon explained, "This is because LG Innotek's optical solutions are performing much better than expected, resulting from a combination of factors such as strong smartphone sales from overseas strategic customers, windfall benefits due to production disruptions at competitors, and increased volume following the resolution of production bottlenecks." Fourth-quarter optical solution sales are expected to exceed the previous quarter by more than 40%. While other IT companies face big bets risk amid CEO changes, LG Innotek has fewer year-end variables.

Next year, while optical solutions remain robust, the semiconductor package substrate, which is globally facing a severe shortage, and the automotive components division, expected to turn around in the second half, are anticipated to contribute. Semiconductor package substrate sales are projected to increase by 30%, from 840 billion KRW this year to 1.09 trillion KRW next year, with margins expected to exceed 20%. Researcher Kwon stated, "The automotive components division is expected to see a performance turnaround starting in the second half of next year as vehicle semiconductor issues are somewhat resolved and volumes increase."

There is an assessment that there are clear reasons behind the recent surge in LG Innotek's stock price. He emphasized, "Along with the rising consensus trend, the stock price has risen 29% over the past month," and added, "As a result of the well-aligned fundamentals, valuation attractiveness, and supply-demand factors, a price-to-earnings ratio (P/E) of up to 10 times seems reasonable."

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