LG Innotek: Major client gaining share; substrates selling well

Research evidence excerpt

LG Innotek: Major client gaining share; substrates selling well

Global Markets Research

LG Innotek 011070.KS 011070 KS 1 July 2026

EQUITY: TECHNOLOGY

Major client gaining share; substrates selling well Rating Remains Neutral

Target price

Increased fromMaintain Neutral; raise TP to KRW930,000 KRW 930,000 KRW 540,000

Reiterate Neutral with a higher TP of KRW930,000 Closing1 July 2026price KRW 907,000

We maintain Neutral rating and raise our TP to KRW930,000 (from KRW540,000), based on

2027F EPS of KRW46,974 (previously: 12MF BVPS of KRW272,335), which we multiply by Implied upside +2.5%

our target P/E of 19.9x (previously: 2.0x P/B). Our target P/E is derived by applying a 70%

premium to the average 2020-22 peak P/E (upcycle) to factor in its substrate business- Market Cap (USD mn) 13,796.5

driven potential growth. We remain Neutral as we see limited margin expansion opportunity ADT (USD mn) 272.0

in the camera module and substrate business. Our outlook may vary based on how quickly

LGI penetrates the server ABF market. The stock currently trades at a 2026F P/E of 21.8x. Relative performance chart

2Q26F OP above consensus by 29.5%; favorable FX and shipments

We estimate LGI will report revenues of KRW5.1tn (-7.0% q-q) and an operating profit

(OP) of KRW199bn (-32.6% q-q) in 2Q26F. Its OP is likely to be above the Quantiwise

consensus estimate of KRW154bn by 29.5%.

We estimate the Optics business will report an OP of KRW120bn (-50.3% q-q; turning

positive y-y). Favorable FX rate (average USD/KRW +2.5% q-q) and the major client’s

shipment increase (+33.0% y-y) are likely to have led the earnings growth y-y, in our view.

The major client is gaining market share against Android smartphone players owing to its

memory sourcing power.