[Edaily Reporter Kim Kyung-eun ] On the 28th, NH INVESTMENT & SECURITIES lowered its target price for LG Innotek(011070)from 1.2 million won to 1 million won, a 16.7% reduction. This move reflects the recent decline in valuations among global peers. However, considering the company’s robust earnings growth and the fact that its projected price-to-earnings ratio (PER) for 2027 is lower than the industry average (approximately 18x), the firm maintained its “Buy” investment rating, noting that the stock remains undervalued.

Hwang Ji-hyun, an analyst at NH INVESTMENT & SECURITIES, stated in a report released today, “Expectations for the expansion of mass production of flip-chip ball grid array (FC-BGA) and the signing of long-term supply agreements (LTAs) remain valid.”

She cited concerns over cost reductions (CR) for smartphone components—driven by rising memory semiconductor prices—as the reason behind the recent stock price weakness. However, she analyzed that concerns regarding price cuts for existing models have been largely alleviated by the second-quarter earnings results.

The analyst projected that the average selling price (ASP) for new products scheduled for release in the second half of the year would rise significantly compared to previous years, as these products will feature variable apertures. The assessment is that, contrary to market concerns, the business environment is developing favorably.

The company also forecast continued improvement in the performance of the Package Solutions division. Driven by rising capacity utilization rates, the average operating profit margin for RF-SiP (Radio Frequency System-in-Package), FC-CSP (Flip Chip Chip-Scale Package), and CSP substrates is estimated to have expanded to the mid-to-high 10% range. For FC-BGA substrates, the firm expects the loss margin to gradually narrow starting in the third quarter as mass production of PC CPU (central processing unit) substrates for North American customers begins. It was also noted that LTA negotiations are in their final stages.

LG Innotek’s second-quarter revenue this year reached 5.5272 trillion won, and operating profit stood at 245.8 billion won, surging 40.5% and 2,058%, respectively, year-over-year and exceeding market expectations. Analysts attributed this performance to the longer-than-expected “long-tail” effect of the iPhone 17 series.

Analyst Hwang predicted, “The trend toward improved profitability will continue as losses are reduced through the ongoing enhancement of camera specifications and the expansion of FC-BGA substrate volumes.”