[Click e-Stock] "LG Innotek, Core Business Strong... Target Price Raised to 340,000 Won"

On December 30, Hana Securities raised its target price for LG Innotek to 340,000 won per share, citing strong performance in the company’s core business.

According to Hana Securities, LG Innotek is estimated to record sales of 7.5071 trillion won and operating profit of 398.8 billion won in the fourth quarter of this year. This represents an increase of approximately 13% and 61% year-on-year, respectively. Compared to the previous quarter, sales and operating profit are expected to rise by 40% and 96%. Kim Minkyoung, a researcher at Hana Securities, explained, “We have raised our operating profit estimate by more than 30% from our previous forecast,” adding, “The main drivers are favorable foreign exchange effects and robust smartphone sales by major North American customers.”

Specifically, she noted, “In the optics division, sales of new smartphone models by North American customers in September and October increased by 20% year-on-year, and the proportion of Pro and Pro Max models remains similar to previous versions.” She continued, “A conservative pricing policy by set manufacturers is stimulating replacement demand, and strong sales in key regions such as China and the United States appear to be continuing for an extended period.”

Growth is also expected for next year’s results. In 2026, sales are projected to reach 22.1956 trillion won, with operating profit at 843 billion won. Kim pointed out, “There are concerns about negative growth in set demand due to rising component costs, including semiconductors. However, stabilization of market share among clients and an increase in the average selling price (ASP) due to camera module specification upgrades (such as variable aperture) are expected to offset these concerns.”

She added, “In the substrate materials division, the start of memory package substrate supply in 2026 and expanded FCBGA supply for PC chipsets are expected to accelerate performance improvement.” She further predicted, “In particular, for FCBGA, new supply for PC CPUs is expected to become visible, leading to a significant reduction in losses.”

Accordingly, Kim maintained a ‘Buy’ investment opinion on LG Innotek and set a target price of 340,000 won per share. The revised target price was calculated by applying the average price-to-book ratio (PBR) band from 2020 to 2025 to the expected book value per share (BPS) for 2026.

Kim concluded, “With robust sales of new North American mobile models continuing for an extended period, short-term performance remains solid. At the same time, the expansion of non-mobile sales is securing mid- to long-term growth drivers.” She also diagnosed, “The supply of camera modules for humanoid robots is expected to become visible in 2026, providing additional momentum.”