DB Securities said on the 4th that expectations are high for LG Innotek's short-term results thanks to a weak won against the dollar and solid sales. It raised its target price to 320,000 won from 260,000 won and kept a buy rating. The previous trading day's closing price for LG Innotek was 271,000 won.
DB Securities estimated LG Innotek's operating profit for the fourth quarter of this year at 406.9 billion won, up 64.1% from a year earlier.
Cho Hyun-ji, an analyst at DB Securities, said, "For LG Innotek, the won-dollar exchange rate is high against the U.S. dollar and is most favorable when it trends upward during the quarter, and the current exchange rate environment is very supportive," estimating that operating profit would increase by more than 50 billion won from the previous quarter due to the exchange rate.
In addition, the combined sales volume for two months after the client's new model launch was tallied at 29.73 million units, marking a record high for the same period since the 11 series. DB Securities also said the flip chip chip scale package (FCCSP) market is booming and that it has secured a foundation for earnings growth by newly entering server-bound memory modules (GDDR7).
Cho said, "Next year, as the client's new model lineup is reorganized, a decline in shipments due to the exit of the standard model is inevitable," but added, "With cost efficiency expected from expanded production in Vietnam and strengthened pricing power from improved rear camera specs, there will be a fundamental improvement in the profit structure."
She added, "It currently combines both visibility for strong fourth-quarter results within the sector and attractive valuation (corporate value)."