KB Securities revised its investment strategy significantly for LG Innotek, a semiconductor component company, offering a positive assessment as of the 28th. Analyzing the results announced for the previous quarter, the firm concluded that LG Innotek recorded figures far exceeding market expectations for operating profit. Consequently, it more than doubled its previously set target price from 350,000 KRW to 750,000 KRW. The firm maintained its investment rating as 'Buy,' strongly expressing confidence in the company's future growth potential.
An analyst from the securities firm responsible for the performance analysis explained the results with specific figures. Operating profit for the quarter reached a staggering 29.53 trillion KRW, surpassing the average expected figure of 21.90 trillion KRW by 35%. Particularly for the next quarter (Q2), it is projected that operating profit will surge 11-fold year-over-year to 12.51 trillion KRW, driven by mobile device-related demand from North American clients that is significantly larger than expected. This indicates a consistent improvement across all business segments, suggesting a substantial enhancement in the company's overall operating environment.
Looking ahead, operating profit is predicted to reach 11 trillion KRW this year and 13 trillion KRW next year. Alongside this, operating profit in the package solution segment is expected to expand from 23.53 billion KRW to 38.53 billion KRW. The most noteworthy point is the shift in the proportion of the substrate business. While the operating profit share of the substrate business was merely 11% last year, it is expected to rise to 21% this year and skyrocket to 30% next year. This is projected to lead to a fundamental change in the business portfolio rather than just a simple increase in revenue.
The primary driver for the expansion of substrate supply is the strengthening of cooperative relationships with global technology giants. Semiconductor substrate supply is expected to expand into areas such as Amazon's low-Earth orbit satellite business, Boston Dynamics' robotics business, and various AI-related humanoid robotics businesses like Figure, centered on Intel's central processing unit (CPU) chips. Based on this strategic collaboration, semiconductor substrate revenue is forecasted to grow rapidly from around 4 billion KRW in 2025 to a scale of 40 billion KRW by 2028. This signifies that the company will establish itself as a key technology cooperation partner rather than just a component supplier, playing an important role in the next-generation industrial ecosystem.