LG Innotek is surging more than 6% early on the 19th on expectations of improved profitability in its substrate business.
As of 10:02 a.m. on this day, LG Innotek was trading at 811,000 won on the Korea Exchange, up 51,000 won (6.71%) from the previous session.
In the securities industry, analysts are rolling out assessments that LG Innotek's substrate business will take root as the second growth pillar after optics.
KB Securities raised its target price for LG Innotek to 1.2 million won from 950,000 won on this day.
Kim Dong-Won, head of research at KB Securities, said, "Although the substrate business accounts for only 8% of companywide sales, its contribution to operating profit is expected to draw a steep upward curve from 11% in 2024 to 19% in 2025, 21% in 2026, and 30% in 2027."
Kim said, "Centered on customers operating artificial intelligence (AI) data centers, demand is exploding for large-area, high-layer, high–value-added substrates whose selling prices are more than 50% higher than before."
NH Investment & Securities also raised its target price for LG Innotek to 1 million won from 700,000 won the day before.
Hwang Ji-hyeon, an analyst at NH Investment & Securities, said, "The trickle-down effect from the deepening substrate shortage is spreading across the industry," adding, "Across the substrate industry, clients are indicating willingness to provide investment funds and are demanding capacity expansions."