[Click eStock] "LGD Expected to Underperform in Q1 and Q2... Possible Rebound with Panel Price Increase in Second Half"

[Asia Economy Reporter Eunmo Koo] Hanwha Investment & Securities expects LG Display's performance in both the first and second quarters of this year to be sluggish due to the impact of the novel coronavirus disease (COVID-19). However, it is forecasted that a performance turnaround will be possible in the second half of the year as panel prices rise and the peak season effect of organic light-emitting diode (OLED) is reflected.

Researcher Soonhak Lee of Hanwha Investment & Securities estimated in a report on the 31st that LG Display's sales in the first quarter of this year will be 5.2 trillion won, with an operating loss of 414.8 billion won, falling short of market expectations. Lee analyzed, "Due to the impact of COVID-19, panel supply and demand have become unstable, causing TV panel prices to rise, but the decline in shipments due to production disruptions and a sharp drop in demand is greater, making performance deterioration inevitable."

There is an assessment that the possibility of performance improvement in the second half of the year is visible. Lee said, "The second quarter performance is also expected to record an operating loss similar to that of the first quarter," explaining, "This is because the spread of COVID-19 infections in Europe and the United States is judged to have a negative impact on demand." He added, "It is somewhat fortunate that the operation of LG Display's Guangzhou OLED plant is being delayed," noting, "If operation is delayed amid decreasing demand for OLED TVs, the burden of depreciation expenses can be reduced." He predicted, "Rather, the performance in the second half of the year is more likely to recover in a V-shaped manner," and forecasted, "Considering the rise in liquid crystal display (LCD) panel prices until the second quarter, the full-scale supply of P (plastic)-OLED to North American customers, and the operation of the Guangzhou OLED plant, a turnaround to operating profit is possible."

The investment opinion was maintained as 'Buy,' and the target stock price was lowered to 16,000 won. Lee said, "If this situation prolongs, companies with high debt like LG Display may face a liquidity crisis." However, he added, "It is estimated that alternative liquidity has been secured until this year, so it is not a cause for major concern," and evaluated, "From a stock price perspective, a low-price buying strategy considering the possibility of performance improvement in the second half of the year is still valid."

This content was produced with the assistance of AI translation services.