[Click eStock] Already Cold, Now COVID-19... LG Display Forecasts 1 Trillion KRW Operating Loss This Year

Uncertainty in TV Demand Amid Aggressive Moves by Chinese LCD Firms... COVID-19 Adds to the Challenges

[Asia Economy Reporter Minwoo Lee] LG Display is expected to record an operating loss exceeding 1 trillion won this year. This is due to the combined negative factors of aggressive competition from Chinese LCD companies, uncertainty in TV demand, and production disruptions caused by the novel coronavirus disease (COVID-19).

On the 1st, DB Financial Investment estimated LG Display's performance this year at sales of 24.115 trillion won and an operating loss of 1.017 trillion won. It is forecasted to continue a deficit on the scale of 1 trillion won again following last year.

The situation from the first quarter is not easy. Due to COVID-19, manpower deployment for normal operation of the Chinese OLED factory is not smooth, and combined with a decrease in LCD volume and a decrease in plastic OLED volume, the operating loss level is expected to exceed forecasts. Therefore, DB Financial Investment adjusted LG Display's first-quarter operating loss range from 357.6 billion won to 457.5 billion won. Researcher Sungryul Kwon of DB Financial Investment explained, "The exchange rate was favorable to the business environment, and the panel prices for LCD TVs rose every month until this month, but it was insufficient to overcome the volume decrease."

The delay in normal operation of the Chinese OLED factory due to COVID-19 is also expected to affect the total production volume this year. DB Financial Investment lowered LG Display's OLED panel shipment volume this year by 7% from the previous estimate to 5.5 million units. The price of LCD TV panels is expected to decline again from the second quarter due to uncertainty in TV demand and increased panel production by Chinese LCD companies. Although plastic OLED volume will increase significantly toward the second half of the year, uncertainty remains regarding the timing of new model launches by overseas strategic customers. Considering these factors overall, LG Display's operating profit and loss for this year was revised downward from 575.8 billion won to 1.0616 trillion won. However, a return to profitability in the fourth quarter is anticipated.

Nevertheless, DB Financial Investment gave LG Display a 'Buy' investment rating. However, the target stock price was lowered to 18,000 won. The closing price the previous day was 11,100 won. Researcher Kwon said, "COVID-19 has a significant negative impact on the TV and display industries, but even considering this, LG Display's current stock price is unacceptable," and added, "The theoretical lowest price calculated by applying this year's book value per share (BPS), considering this year's net loss, to the past lowest price-to-book ratio (PBR) is 12,500 won."

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