“Fine M-Tec: Foldable-quality concerns are unfounded”; target price raised 26% ... “LG H&H’s price appeal has grown”; rating upgraded from Hold to Buy [Stocktopia]

[Financial News] Here is a roundup of reports from major securities firms on the morning of October 27.
Analysts say the controversy over the quality of foldable phones in North America is only a short-term concern unrelated to Fine M-Tec Co., Ltd., which makes internal hinges for foldable smartphones.
LG Household & Health Care’s rating was upgraded from Hold to Buy on the view that, although near-term earnings improvement will be limited, the share price decline has widened the gap between the stock price and the target price. HD Hyundai Marine Solution’s target price was lowered due to the won’s strength, but the company was viewed as undervalued compared with its peers.
◆ Fine M-Tec Co., Ltd. (441270)— Hyundai Motor Securities / Analyst Kim Jong-bae
Target price: 14,500 won (up 26.1% from 11,500 won) | Previous day’s closing price: 9,400 won
Investment rating: Buy (maintained)
Hyundai Motor Securities raised its target price for Fine M-Tec Co., Ltd. to 14,500 won, saying the controversy over the quality of foldable smartphones in North America was only a short-term concern unrelated to the company. Fine M-Tec Co., Ltd. primarily manufactures backplates, internal-hinge components that support the display from beneath the screen of a foldable phone.
Analyst Kim Jong-bae said of the quality issue, “We believe these concerns are merely short-term noise.” He said the problems being reported with new products in North America were unrelated to the backplate and were understood to stem from other components that had previously faced issues, as well as yield in the assembly process.
Instead, the company is absorbing some market share due to quality problems at competitors and maintaining its position as a key supplier. Kim said demand had not changed at the current mass-production stage and the company was responding at its maximum monthly production capacity. In other words, supply volumes have not fallen despite the controversy, and the factory is running at full capacity.
Third-quarter operating profit was forecast at 19.1 billion won, up 1,141% from a year earlier and above both previous estimates and market expectations. The forecast assumes North American foldable-phone shipments of 15 million to 16 million units next year, at least double this year’s level. Fine M-Tec Co., Ltd. is in the process of ordering additional equipment, and analysts estimate it could increase production capacity next year by as much as 30% or more from current levels.
Analyst Kim said the company was “one of the few domestic supply-chain firms capable of supplying key components to leading foldable-phone makers at home and abroad,” adding, “Given the company’s full-fledged earnings growth and other factors, we believe its shares remain undervalued.”※ BackplateA backplate is a metal component attached beneath the OLED panel in a foldable smartphone to support the folding area. It is also known as an “internal hinge.” As a key component affecting screen creasing and durability, demand for it rises along with foldable-phone shipments.
◆ LG Household & Health Care (051900)— Sangsangin Securities / Analyst Song Ji-yeon
- Target price: 350,000 won (up 6.1% from 330,000 won) | Previous day’s closing price: 257,500 won
- Investment rating: Buy (upgraded)
Sangsangin Securities raised its rating on LG Household & Health Care from “Hold” to “Buy” and lifted its target price to 350,000 won, highlighting the wider gap with the target price following the decline in the share price.
Analyst Song Ji-yeon said, “We are raising both our rating and target price as the gap between the target price and the current share price has widened following the recent share-price decline,” while cautioning that “near-term earnings improvement is also expected to be limited.” In other words, the upgrade was not because earnings had improved, but because the share price had fallen sharply, widening the gap with the target price.
Third-quarter operating profit was expected to rise 101.5% from a year earlier to 93.1 billion won, but fall short of the market consensus of 103.4 billion won. Analysts said the increase would largely reflect the low base, as profit in the third quarter last year was just 46 billion won.
On cosmetics, Analyst Song said, “In China, the contraction in revenue is expected to deepen due to reduced livestreaming and the off-season, and losses are expected to continue.” She also expected monthly revenue in North America to decline by about 20 billion won from September as Avon was excluded from consolidation.
◆ HD Hyundai Marine Solution (443060)— NH Investment & Securities / Analyst Jeong Yeon-seung
- Target price: 280,000 won (down 9.7% from 310,000 won) | Previous day’s closing price: 169,600 won
- Investment rating: Buy (maintained)
NH Investment & Securities lowered its target price for HD Hyundai Marine Solution to 280,000 won to reflect the stronger won and higher market interest rates, but maintained its Buy rating, saying the company remained undervalued compared with its peers.
Analyst Jeong Yeon-seung said earnings estimates for 2027 and 2028 had been lowered by 4% and 7%, respectively, to reflect the stronger won, and that the target valuation had also been reduced by 3% in consideration of higher market interest rates.
Third-quarter operating profit was 95.7 billion won, 9.7% below market expectations. However, excluding the 9 billion won in one-off costs related to the acquisition of engine-maintenance company Goltens, it was “in line with market expectations,” the analyst said.
Operating margins in the company’s core businesses—AM Solution, eco-friendly solutions and digital solutions—reached 26.7%. AM Solution revenue was 282.7 billion won, setting a record for the seventh consecutive quarter. The backlog of engine long-term service agreements (LTSAs) stood at $590 million, up 21% from the beginning of the year.
Analyst Jeong highlighted that HD Hyundai Marine Solution was pursuing a long-term service agreement of at least seven years with U.S. energy infrastructure developer Aperion Energy Group for power-generation engines used in data centers. He expected related revenue to begin in the second half of 2029, with higher profitability than marine applications.※ AM Solution (After Market Solution)This is an aftermarket service business that continues throughout a vessel’s operating life after delivery, including the supply of engine parts, maintenance and modification. Unlike new ship orders, it is less sensitive to economic fluctuations and more profitable, making it a core business for HD Hyundai Marine Solution.※ Long-Term Service Agreement (LTSA)An LTSA is an agreement in which an engine manufacturer or service provider sets out in advance with a shipowner the terms for maintenance and parts supply over several years. It provides a stable stream of revenue over the contract period, making the order backlog a useful indicator of earnings visibility.

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