[Click eStock] "LG Innotek Confirms Stock Bottom... Target Price Up"

Target Price Raised by 20% Compared to Previous Level

On the 25th, KB Securities raised the target price for LG Innotek from 250,000 KRW to 300,000 KRW, viewing the stock price as having confirmed its bottom. The investment rating was maintained at 'Buy.'

Dongwon Kim, a researcher at KB Securities, explained, "We are raising LG Innotek's target price by 20% compared to the previous estimate. This is because the iPhone sales slump confirmed its bottom in March, and the operating profit for the first half of the year was revised upward to twice the previous estimate. Accordingly, we raised LG Innotek's net profit forecasts for 2024 and 2025 by 29% and 30%, respectively."

LG Innotek's first-quarter performance this year exceeded market expectations. LG Innotek announced that its first-quarter sales this year decreased by 0.97% year-on-year to 4.3336 trillion KRW, while operating profit increased by 21.1% to 176 billion KRW. Researcher Kim said, "The first-quarter operating profit exceeded the consensus (average securities firm forecast) by 28%. In particular, second-quarter sales are expected to grow both quarter-on-quarter and year-on-year by 4% and 16%, respectively, due to the effect of rising average selling prices (ASP) from expanded shipments of high-value-added products. As a result, sales in the first half of the year are expected to reach an all-time high." The estimated second-quarter operating profit is expected to increase by 324% year-on-year to 77.8 billion KRW, surpassing the consensus by four times.

Concerns that had suppressed the stock price are being resolved, and the stock price is expected to start rising from the second quarter. Researcher Kim said, "Over the past year, LG Innotek's stock price fell by 20% due to concerns such as weak iPhone sales and uncertainty about iPhone AI integration, and it has fallen by 13% since the beginning of the year. However, the iPhone sales slump has eased since March, and the iPhone AI strategy is expected to be unveiled at the June Worldwide Developers Conference (WWDC). Therefore, LG Innotek is expected to have resolved these two concerns in the first half of the year, confirming the stock price bottom." He added, "From the second quarter, the stock price is expected to start rising as it reflects improved performance in the second half and expectations for new businesses."