KB Securities maintained its 'buy' rating and 2 million won target price for LG Innotek on the 16th, forecasting the company's H2 earnings will significantly exceed market expectations. Research Division Head Kim Dong-won projected Q2 operating profit at 244.8 billion won, a roughly 22-fold year-on-year increase that would surpass market consensus by 36%. The forecast is driven by new product effects in the optical solution business, where average selling prices are expected to rise 30-40% in H2. Kim emphasized that Q2's earnings surprise is only the beginning, with H2 results likely to continue exceeding market expectations amid expanding AI semiconductor substrate supply contracts with big tech firms.
KB Securities Projects LG Innotek Q2 Operating Profit at 244.8 Billion Won
Kim Dong-won stated that Q2 operating profit will reach 244.8 billion won, representing approximately a 22-fold increase compared to the same period last year. This figure exceeds market consensus by 36%.
Optical Solution Prices Expected to Rise 30-40% in H2
Kim forecasted that average selling prices in the optical solution business will increase 30-40% in H2 due to new product effects. He stated that "Q2's earnings surprise is only the beginning" and emphasized that "H2 earnings are increasingly likely to exceed market expectations."
LG Innotek Expands AI Semiconductor Substrate Supply Contracts with Big Tech
Kim identified expanding AI semiconductor substrate contracts with big tech companies as a positive investment factor. He explained that "LG Innotek is currently in binding supply contract negotiations and equipment investment support discussions with two global big tech companies." Kim added that "recently, beyond the existing two companies, requests for additional supply contracts from multiple US big tech firms have been surging."
FC-BGA Revenue Projected to Reach 2.3 Trillion Won by 2030
KB Securities estimated LG Innotek's flip-chip ball grid array (FC-BGA) revenue will grow eightfold from 140 billion won this year to 1.1 trillion won by 2028, and surge sixteenfold to 2.3 trillion won by 2030.
KB Securities Identifies Recent Stock Decline as Buying Opportunity
Kim assessed that "the recent stock price adjustment reflects the market's excessive concerns about AI investment pace rather than corporate value impairment." He stated that "the stock's 61% plunge from its peak in a short period is merely a price adjustment created by market concerns about AI investment sustainability, and will clearly serve as a buying opportunity."
FAQ
What is KB Securities' target price for LG Innotek stocks?
KB Securities maintained its target price of 2 million won for LG Innotek while keeping its 'buy' investment rating.
How much did LG Innotek stocks fall from their peak?
LG Innotek stocks fell 61% from their peak in a short period, which KB Securities' Kim Dong-won attributed to market concerns about AI investment sustainability rather than corporate value impairment.
