Kyobo Securities announced on July 2 that it expects LG Innotek's second-quarter performance to exceed market expectations, raising its target price to 1.3 million won and maintaining a "buy" rating.
Choi Bo-young, an analyst at Kyobo Securities, stated in a report that LG Innotek is projected to achieve a revenue of 4.976 trillion won (up 26% year-over-year, down 10% quarter-over-quarter) and an operating profit of 202 billion won (up 1,668% year-over-year, down 32% quarter-over-quarter), surpassing the consensus estimate of 153.7 billion won by more than 30%.
Choi noted that while a decline compared to the previous quarter is inevitable due to the seasonal off-peak period, the company's profitability is expected to improve significantly year-over-year, driven by a solid profit trend in optical solutions and robust growth in substrate materials.
He added that the substrate materials segment is expected to show the highest profit margins among all business divisions, with a ramp-up in high-value substrates for servers and artificial intelligence (AI) expected to gradually increase quarterly profit levels and enhance the overall profit mix. The automotive components sector is anticipated to maintain stable performance.
Choi also projected that the performance momentum in the second half of the year will be strengthened as new model cycles from North American clients coincide with a price increase cycle for substrates. The growing demand for high-end substrates is expected to solidify collaborations with major tech clients, potentially triggering further stock price increases.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.