Daishin Securities on the 24th raised its target price for LG Innotek to 1.3 million won from 630,000 won to reflect improved profitability in the optical solution business and growth in the semiconductor substrate business. It maintained a "buy" rating.
Park Kang-ho, an analyst at Daishin Securities, projected LG Innotek's operating profit for the second quarter of this year at 193.6 billion won. That would be up 1,599% from a year earlier and 30.2% above the market consensus. Revenue for the same period was expected at 5.01 trillion won, up 27.4% from a year earlier.
Daishin Securities said that alongside growth in the semiconductor substrate business, profitability in the optical solution institutional sector is beating market expectations.
Park said, "So far, a re-rating has taken place thanks to strong earnings in semiconductor substrates, a shift from a mobile-centric mix to a higher share for servers, and stronger competitiveness in flip chip ball grid array (FC-BGA)," adding, "At this point, the profitability competitiveness of camera modules is being reaffirmed, and there is a high possibility that profit improvement in optical solutions in the second half of 2026 and in 2027 will exceed expectations."
In particular, expansion of production of Apple's premium iPhones was expected to drive earnings improvement.
Park said, "In optical solutions, the increased production share of premium models within Apple appears to have maximized the mix effect," adding, "Strong sales of Apple's iPhone 17 will also contribute to stable utilization rates."
The outlook for future earnings was also presented positively. Daishin Securities estimated LG Innotek's full-year operating profit at 1.08 trillion won. First-half operating profit was projected at 488.9 billion won, up 258% from a year earlier, and second-half operating profit was expected to increase 12.7% to 595.6 billion won.
A shift in Apple's product launch strategy was also cited as a mid- to long-term growth driver.
Park said, "With changes in Apple's smartphone launch strategy and iPhone lineup, iPhone shipments in 2027 will reach about 273 million units, up 5.6% from the previous year," adding, "That would far outpace the market growth forecast of 2.9%."
He added, "In 2027, Apple will, for the first time, release a total of six to seven models split between the first and second half," and "Rising foldable phone sales and the high likelihood of adding a 20th-anniversary special edition of the iPhone could push both production and demand above expectations."