[Click e-Stock] "LG Innotek Expected to See Balanced Growth Across All Divisions Next Year... Target Price Up"

On December 16, IBK Investment & Securities raised its target price for LG Innotek from 270,000 won to 350,000 won, expecting balanced growth across all business divisions next year. The investment opinion remains 'Buy'.

Kim Woonho, an analyst at IBK Investment & Securities, stated, "We are raising LG Innotek's target price by 29.6% compared to the previous level," adding, "Second-half results are improving rapidly, and next year's performance in the Optical Solutions division is expected to surpass this year's. There is also potential for improved market share among clients. Furthermore, the substrate materials and automotive components divisions are expected to see profitability improvements due to a better product mix."

IBK Investment & Securities estimates LG Innotek's fourth-quarter results this year at 7.7368 trillion won in sales, up 44.1% from the previous quarter, and operating profit doubling to 409.6 billion won. Kim explained, "The main reason is the rise in the won-dollar exchange rate, and the Optical Solutions division will lead the performance increase due to seasonal demand." He added, "The increase in operating profit is attributable to higher sales and improved operating margin."

Balanced growth is expected across all business divisions next year. Kim forecasts, "LG Innotek's sales next year will increase by 8.8% year-on-year to 23.9666 trillion won," and noted, "While all divisions are expected to grow evenly, the substrate materials and automotive components divisions, which have secured new customers, are likely to see even higher sales growth than the Optical Solutions division." He continued, "Next year's operating profit is projected to rise 18.9% year-on-year to 891.8 billion won, with improved profitability expected in the substrate materials and automotive components divisions. Reduced depreciation and cost savings will also contribute to improved profitability," he added.