[Click e-Stock] "LG Innotek Expected to Deliver Strong Q1 Results... Valuation Appeal Highlighted"

"Strong Smartphone Sales to North American Client, Favorable Exchange Rate Effects"
"Share Price Significantly Undervalued"

On April 1, DB Financial Investment maintained its "Buy" investment opinion on LG Innotek and raised its target price from 320,000 won to 370,000 won, stating that "the company's first-quarter earnings are expected to exceed market expectations."

On this day, Hyunji Cho, a researcher at DB Financial Investment, projected LG Innotek's first-quarter 2026 revenue at 5.5319 trillion won (an 11% increase year-on-year) and operating profit at 203.8 billion won (a 62.9% increase). This is significantly higher than the market consensus operating profit of 176.2 billion won. It is also the first time since 2022 that operating profit has exceeded 200 billion won in the seasonally slow first quarter.

The strong performance is attributed to robust smartphone sales to a North American client and favorable foreign exchange effects. Cho noted, "Cumulative sales of the client's new model over six months increased by 16% compared to the previous model, and certain lineups also showed very strong sales in February. The optical solutions business unit is expected to maintain solid profitability due to increased volume from strong client sales and sustained high utilization rates."

She further explained, "In the package solutions division, more than half of the BT substrates are linked to client demand, and the utilization rate is currently at 100%. The mobility solutions division is also expected to see increased volumes, particularly of high-value-added lighting products."

Researcher Cho emphasized that LG Innotek's current share price is significantly undervalued. She pointed out, "While improvement in the product mix of the package solutions division is expected, the 12-month forward price-to-earnings ratio (PER) average for global competitors is about 35x, whereas LG Innotek's is only 12x. Even among memory substrate manufacturers, its valuation (stock price relative to corporate value) is the lowest."

Furthermore, Cho added, "Reflecting the upward revision of our first-quarter estimates, we have increased our annual operating profit estimate for this year by 7% and raised our target price-to-book ratio (PBR) to 1.4x. In an environment of heightened market uncertainty due to macroeconomic factors, LG Innotek could be an attractive option offering both short-term strong earnings and price appeal."

This content was produced with the assistance of AI translation services.