LG InnoTech has been facing cost pressure due to recent currency depreciation. Meritz Securities announced on the 21st that “the lower current exchange rate applied compared with last quarter’s performance is expected to increase earnings pressure” and lowered LG InnoTech’s target price from KRW1,200,000 to KRW1,000,000. Alongside this, investors continue to maintain a ‘buy’ stance while the company stresses the need for a strategy to respond to currency fluctuations while improving its financial structure.
Meritz Securities research analyst Yang Seungwoo said that “total sales are expected at 5.7003 trillion won and operating profit at 150.1 billion won, which is adjusted down by 10.9% and 53.6% respectively compared with prior estimates.” He also explained that the ‘Camera Modu’ product line is highly sensitive to short‑term currency fluctuations due to timing differences between material purchases and finished‑goods sales. Recently, strong local currency and high interest rates have meant that new material purchases are not reflected in production costs, leading to a slight delay in launching some new products.
In this situation, LG InnoTech claims there is no significant change in market share or average selling price among its major customers. However, the effect of price changes and delays in sales are judged as due to currency rates and launch delays, and the structural weakening of competitiveness from the target‑price adjustment is expected to have a large impact on the company overall.
In conclusion, LG InnoTech must simultaneously pursue cost control and supply‑chain optimization to respond to current currency fluctuations. Investors should see that through this target‑price adjustment the company intends to strengthen its financial strength and market responsiveness, and a prudent assessment of long‑term growth prospects is required.