[Click eStock] "LG Innotek's Operating Profit Expected to Surpass Estimates Again This Year... Target Price Raised to 350,000 Won"

On January 8, Kiwoom Securities raised its target price for LG Innotek to 350,000 won per share, stating that the company’s operating profit in 2026 is expected to exceed market expectations.

Kim Sowon, a researcher at Kiwoom Securities, stated in the report titled "LG Innotek - Camera Module, Entering an Upgrade Cycle" released that day, "We believe the company still offers attractive valuation, and the expansion of its business in components for humanoid robots is also a positive factor."

LG Innotek’s earnings for the fourth quarter of last year are projected to exceed market expectations, with sales of 7.9839 trillion won and operating profit of 415.8 billion won. Kim noted, "With the continued rise in the dollar exchange rate and solid demand for the iPhone 17 series, the company’s market share is also steadily improving," adding, "In 2025, company-wide operating profit is expected to increase by 7% year-on-year to 756.1 billion won, marking the end of a period of earnings contraction and entering a phase of profit improvement for the first time in three years, contrary to previous expectations."

Furthermore, this year’s operating profit is also forecast to surpass market expectations. Kim projected, "It will reach 954.1 billion won (up 26% year-on-year), exceeding the market expectation of 857.3 billion won," and added, "Even assuming a decline in iPhone shipments, all three factors-price (P), quantity (Q), and cost (C)-are expected to improve."

Specifically, he stated, "A variable aperture is expected to be adopted in the iPhone 18 Pro series," and predicted, "This will directly lead to an increase in the average selling price (ASP) of camera modules." He continued, "The package solution division is also expected to achieve both quantitative and qualitative growth, driven by diversification of customers for FC-BGA and expanded supply of GDDR7," adding, "With the proportion of camera module production in Vietnam expected to expand to 50% by 2026, cost reduction effects are also expected to continue."

Accordingly, Kim stated, "The current share price is at a 12-month forward price-to-book ratio of 0.96 and a price-to-earnings ratio of 10.1, so valuation remains attractive," and maintained a buy rating with a target price of 350,000 won.

He pointed out, "The share price remains undervalued compared to the past due to concerns about possible camera module price pressure from rising semiconductor prices and uncertainties in set demand," and emphasized, "From 2026 to 2027, the upgrade cycle in camera modules and the resulting rise in price (P) will drive a revaluation of both earnings and share price." Kim also highlighted that LG Innotek is expanding collaboration with global humanoid robot companies, such as developing vision sensing modules for the Boston Dynamics Atlas model, noting, "This is a medium- to long-term growth momentum."