"Securities Firms Raise LG Innotek Target Price to 1.2 Million Won [Weekend Money]"

NH Investment & Securities and KB Securities have raised their target price for LG Innotek to 1.2 million won. The reasons cited include expectations of share price synchronization with semiconductor stocks and benefits from autonomous driving.

According to the securities industry on May 23, NH Investment & Securities raised its target price for LG Innotek from 1 million won to 1.2 million won the previous day, maintaining its "Buy" investment opinion. This marks a further upward revision just days after the company increased the target price from 700,000 won to 1 million won on May 18. KB Securities also raised its target price by 26%, from 950,000 won to 1.2 million won. The 1.2 million won target is the highest among domestic securities firms.

Kim Dongwon, Head of Research at KB Securities, explained the reason for the upward revision, stating, "Numerous big tech clients are proposing binding long-term supply contracts for LG Innotek's substrate business, which include large-scale advance payments, penalty clauses, and equipment investment support, similar to the contract structure seen in memory semiconductors."

Kim also emphasized, "This is expected to reduce future earnings volatility and increase earnings visibility, serving as a strong catalyst for a valuation re-rating. In particular, the long-term supply agreements (LTAs) through 2030 mean a shift to an order-based production system similar to the foundry business model." KB Securities has raised its operating profit estimates for 2026 and 2027 to 1.2 trillion won and 1.5 trillion won, respectively. Net profit estimates have also been raised to 884.4 billion won and 1.2 trillion won, respectively.

There is also analysis that LG Innotek is the most undervalued among global substrate companies. Currently, leading global substrate companies are trading at an average price-to-earnings ratio (PER) of 59 times and a price-to-book ratio (PBR) of 10 times for 2026, with an average market capitalization of 40 trillion won. In contrast, LG Innotek's 2026 PER is 20 times and its PBR is 2.8 times, representing discounts of 66% and 71%, respectively.

Kim further commented, "The expansion of big tech equipment investment support, advance payments, and long-term supply contracts—similar to memory semiconductor contract structures—will enhance earnings visibility and is expected to lead to share price synchronization with Samsung Electronics and SK hynix in the future." He added, "The target price of 1.2 million won (market capitalization of 28 trillion won) proposed by KB Securities is a conservative estimate that reflects only half the average valuation of global substrate companies."

Likewise, NH Investment & Securities, which also set a new target price of 1.2 million won, drew attention to LG Innotek's strengthening position in autonomous driving. Hwang Jihyun, a researcher at NH Investment & Securities, assessed, "It is positive that the company's autonomous driving-related business is expanding from vehicle camera modules to automotive AP modules and FCBGA substrates for autonomous driving."

The company also set a 2030 sales target of 5 trillion won for automotive electronics components, explaining, "The automotive electronics component business—including vehicle communications, lighting, cameras, and BMS—plans to grow at an average annual rate of 20% over the next five years, which exceeds the overall corporate sales growth rate." It was further noted, "As the company expands from an IT set-focused portfolio to automotive electronics and semiconductors, business risk is gradually being diversified."

Previously, when the target price was raised to 1 million won on May 18, researcher Hwang noted, "The trickle-down effect from the deepening substrate shortage is stronger than expected," and "the growth visibility of the package solution division has increased."

NH Investment & Securities and KB Securities are not the only firms that raised their target price for LG Innotek this week. Daol Investment & Securities, citing the substrate business’s growth potential as still underappreciated, raised its fair value estimate from 680,000 won to 950,000 won. Yuanta Securities raised its target from 670,000 won to 850,000 won, while Meritz Securities increased its target from 680,000 won to 810,000 won.

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