[Click eStock] "LG Innotek, First Year in Glass Substrate Business... Concerns Over Negative Growth Resolved"

Daishin Securities forecasted on the 18th that LG Innotek will overcome concerns of negative growth as it fully launches its new growth businesses this year. The investment rating of Buy and the target price of 260,000 KRW were maintained.

Park Kang-ho, a researcher at Daishin Securities, stated, "Although the US has exempted mutual tariffs on smartphones, the 20% tariff on fentanyl from China remains, and there is a possibility of tariffs being imposed on semiconductor items. There is also concern that Apple may pass on some of the price increases to its component suppliers. However, at this point, we focus on valuation undervaluation and decide to increase weight from a mid- to long-term perspective."

Researcher Park anticipated downside rigidity in LG Innotek's stock price. He explained, "Smartphones are excluded from mutual tariffs, escaping the worst-case scenario, and Apple's expansion of production in India is also interpreted positively. Although tariffs on semiconductor items are a burden, we judge that the impact of tariff policies on the stock price is limited."

LG Innotek's operating profit for this year is estimated at 732.8 billion KRW, a 3.8% increase compared to the same period last year. Researcher Park said, "The increase in operating profit margin is important due to the rise in average selling price (ASP), the expansion of the high-priced segment such as Pro and Pro Max, and the mix effect, rather than just the increase in iPhone sales by Apple."

He added, "LG Innotek, which has secured a high market share in the premium segment, is expected to benefit. We forecast an increase in operating profit in 2026 due to the expansion of production share in Vietnam and the reduction of overall depreciation expenses."

Researcher Park also focused on the expansion of the flip chip-ball grid array (FC BGA) and glass substrate businesses this year. He said, "It is estimated that the possibility of supplying high value-added products to Intel in the second half has increased. We expect full-scale sales growth in 2025. Although the sales scale is small compared to competitors, the growth is high, and considering the synergy effect with LG Innotek's semiconductor package business, we forecast a significant increase in sales in 2026."