LGD Hits 52-Week High... Minimal Impact from Huawei

[Asia Economy Reporter Koh Hyung-kwang] LG Display's stock price has been steadily rising recently, hitting a 52-week high amid expectations of improved earnings. The impact of the U.S.'s ultra-strong sanctions on Huawei, China's largest telecommunications equipment and smartphone company, is also expected to be limited.

According to the Korea Exchange on the 15th, LG Display closed at 16,600 KRW on the KOSPI market the previous day, down 0.9%. This marks a 21.1% increase compared to the stock price of 13,700 KRW on the 14th of last month, and an 87.5% rise compared to the yearly low on March 19. Although it closed lower the previous day, the stock price rose to 17,150 KRW early in the session, setting a new 52-week high. Based on the previous day's closing price, the market capitalization stood at 5.9397 trillion KRW, approaching the 6 trillion KRW mark for the first time in over a year.

The rise in LG Display's stock price appears to reflect expectations of improved earnings, including a turnaround to operating profit in the third quarter. Securities firms predict that LG Display will post an operating profit in the third quarter and maintain a profitable trend in the fourth quarter. Kwon Sung-ryul, a researcher at DB Financial Investment, said, "The performance of Plastic Organic Light Emitting Diode (POLED) and large OLED is becoming substantial, and LCD panel prices and exchange rates are better than expected. LG Display's operating profit in the third quarter is turning from a loss to a profit, and the scale of operating profit in the second half is improving more than expected."

Park Sung-soon, a researcher at Cape Investment & Securities, also forecasted, "Profitability will improve due to shipments of POLED to North American customers, improved demand for LCD TVs, and rising panel prices, leading to earnings improvement. Third-quarter sales are expected to rise 27.1% quarter-on-quarter to 6.75 trillion KRW, with operating profit turning to a 19.9 billion KRW profit." For these reasons, foreigners and institutions have been net buyers of LG Display shares, purchasing 61.1 billion KRW and 21.9 billion KRW respectively over the past month, driving the stock price up. Cape Investment & Securities raised LG Display's target price by 33.3%, from 15,000 KRW to 20,000 KRW.

Although the U.S. sanctions on Huawei are expected to impact the display industry, including LG Display, LG Display's sales proportion to Huawei is small, so the relative impact is expected to be minimal. An industry insider said, "Most domestic display companies have a small supply proportion to Huawei, so the short-term impact is not significant. Since other companies will take over Huawei's volume, the long-term impact will also be minimal."

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