Published 14 Apr.2023 08:19(KST)
NH Investment & Securities analyzed that despite LG Innotek's poor performance, the current stock price is excessively undervalued. Accordingly, they maintained a 'Buy' investment rating but lowered the target price from 450,000 KRW to 350,000 KRW.
Researcher Lee Gyu-ha of NH Investment & Securities stated, "We lowered the earnings estimates considering the weak smartphone sales of client companies in the first half, increased depreciation expenses due to expanded production capacity, and potential yield issues in the mass production of new camera modules. However, even with conservative estimates, the current stock price is in an excessively undervalued range."
Lee explained, "We forecast this year's operating profit to be 1.0017 trillion KRW, down 18.2% from the previous estimate and a 21.2% decrease compared to last year. This reflects conservative margin calculations assuming weak smartphone sales in the first half, increased annual depreciation expenses, and yield issues in the second half."
He added, "The reason we still consider the current stock price excessively undervalued is that the expected price-to-earnings ratio (PER) based on this year's projected earnings per share is 9.8 times, which is at the lower end of the historical valuation band, and strong sales from North American smartphone companies are expected in the second half. Given that most negative factors are already priced in, increasing the weighting at the current stock price is reasonable," he emphasized.
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