[Click e-Stock] "LG Innotek Enters Growth Phase... Target Price Raised"

Target Price Raised from 280,000 Won to 350,000 Won

On December 9, Daishin Securities announced that it expects LG Innotek to enter a growth phase starting this year, raising its target price from 2.8 million won to 3.5 million won. The firm maintained its "Buy" investment rating and its view of LG Innotek as a "top pick" for the first half of next year.

Park Kangho, a researcher at Daishin Securities, explained, "The rationale for maintaining LG Innotek as a top pick is the expectation that operating profit will reach 748.6 billion won in 2025, marking a turnaround from negative growth to expansion, with further growth anticipated in 2026 and 2027." He added, "The upward revision of operating profit for the fourth quarter of 2025 is expected to result in three consecutive years (2025-2027) of growth, which should highlight the current undervaluation of the stock."

Daishin Securities estimates LG Innotek’s operating profit for the fourth quarter of this year at 408.4 billion won. This significantly exceeds both the previous estimate (342 billion won) and the market consensus (340.8 billion won). Park stated, "We are revising up our earnings per share (EPS) forecasts for 2025 and 2026 by 11.8% and 3%, respectively." He continued, "The average monthly KRW-USD exchange rate rose from 1,392 won in September to 1,425 won in October, 1,460 won in November, and reached 1,469 won as of December 8, surpassing the company’s guidance. Given that the fourth quarter is traditionally the peak season, the increase in the KRW-USD rate is making a significant contribution to improved profitability." He also added, "Sales momentum for the iPhone 17 is stronger than previously feared, and the higher proportion of premium models such as the Pro and Pro Max is resulting in a stable utilization rate and positive mix effects."

Operating profit in 2026 and 2027 is forecast to grow by 6.1% and 11.1% year-on-year, respectively. Park commented, "With Apple expected to adopt a variable aperture in the iPhone 18 (2026), the average selling price of camera modules should rise, and the number of iPhone models, including foldables, is also set to increase." He continued, "For the iPhone 19 (2027), additional price increases and mix effects are expected as the specifications of the main camera are upgraded and key components are more deeply integrated in-house. As LG Innotek expands its manufacturing presence in Vietnam and strengthens its competitiveness in the premium segment, the company is poised to achieve both top-line growth and improved profitability."

There is also an expectation that the customer base for Flip Chip Ball Grid Array (FC-BGA) substrates will expand, making 2027 a pivotal year for growth. Park said, "Currently, semiconductor substrates are focused on mobile applications, but next year, LG Innotek is expected to enter the PC-oriented central processing unit (CPU) market for FC-BGA and secure major big tech clients." He added, "Sample provision and qualification (performance) testing are underway, with final decisions expected in the first half of next year and supply to begin in the second half. Entry of FC-BGA into the CPU market means diversification into server and artificial intelligence (AI) sectors, signaling the company's entry into a full-fledged growth trajectory."

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