LG Innotek is experiencing a strong performance in early trading, driven by expectations for growth in its substrate business.
According to the Korea Exchange, as of 10:16 a.m. on May 19, LG Innotek shares rose by 51,000 won (6.71%) to 811,000 won. The stock opened at 770,000 won and briefly reached 829,000 won during the session.
Market analysts attribute this surge to the substrate business emerging as a new growth driver following the existing optical business, prompting several brokerages to raise their target prices.
KB Securities noted in a report that "multiple big tech clients are proposing binding long-term supply contracts for the substrate business, including large upfront payments and penalty clauses similar to those in memory semiconductor agreements, along with support for facility investments." As a result, they raised their target price for LG Innotek by 26% to 1.2 million won.
Meritz Securities also increased its target price by 19.1% to 810,000 won, reflecting upward revisions in performance estimates for the package solution division from this year to next year and adjusting the target price-to-book ratio from 2.3 times to 2.6 times.
NH Investment & Securities stated that "the deepening substrate shortage is spreading benefits across the industry, leading us to remove the previous 30% multiple discount applied to the package solution division. We expect the benefits from camera specification upgrades for major clients to be greater than previously anticipated, prompting us to revise our performance estimates upward." They raised their target price from 700,000 won to 1 million won while maintaining a 'buy' recommendation.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.