[Click eStock] "LG Innotek with Clear Earnings Outlook, Expectations for Second Half Remain... Target Price Maintained"

[Asia Economy Reporter Myung-hwan Lee] DB Financial Investment announced on the 24th that it maintains a buy rating and a target price of 450,000 KRW for LG Innotek. The company also forecasted strong performance in the second half of the year.

DB Financial Investment's analysis suggests that LG Innotek's strong performance in the second quarter this year bodes well for its results in the second half. They pointed out that the peak season for optical solutions is beginning, while the substrate materials division remains solid. The automotive components division is also showing progress. They expect the average selling price (ASP) to rise as a 48-megapixel camera is adopted in higher-end models of overseas strategic customers for optical solutions. Optical solutions sales are projected to increase by more than 20% compared to the previous quarter, significantly improving profitability.

Other divisions are also expected to deliver solid results. Among LG Innotek’s divisions, the substrate materials division, which is the most profitable, is maintaining high profitability with good package substrates despite sluggishness in display-related components. DB Financial Investment forecasts that the substrate materials division will contribute 28% to operating profit this year. The automotive components division is seeing a gradual reduction in losses due to improved sales flow. This is attributed to eased supply constraints on automotive semiconductors, increased shipments, and some price hikes.

DB Financial Investment projects LG Innotek’s operating profit for the third quarter of this year to be 431.2 billion KRW, a 28.4% increase compared to the same period last year. The current market consensus is 414 billion KRW, but considering exchange rate trends, there is significant room for upward revision.

DB Financial Investment also assesses that LG Innotek’s stock price has become attractive after sufficient adjustment. Researcher Sung-ryul Kwon of DB Financial Investment stated, "Because the customer base is solid, LG Innotek can deliver the most stable performance, and a price-to-earnings ratio (PER) of around 6 times is not burdensome," adding, "Looking at the stock prices of companies related to overseas strategic customers over the past month, only LG Innotek has been left out."

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