[Click eStock] "Clear Growth Trend LG Display, Operating Profit Expected to Approach 3 Trillion Won This Year"

LCD Panel Unit Price Continues to Rise... OLED Profitability Expected to Improve in Second Half

[Asia Economy Reporter Minwoo Lee] LG Display is expected to show clear growth in the second quarter, driven by strong demand for TV panels and rising panel prices due to supply shortages of key components. It is analyzed that performance improvement will accelerate further as it enters the seasonal peak in the second half of the year.

On the 24th, Hi Investment & Securities forecast that LG Display will record sales of 7.089 trillion KRW and an operating profit of 621 billion KRW in the second quarter of this year. Sales are expected to increase by 34% compared to the same period last year, and operating losses are expected to turn into profits. Compared to the previous quarter, sales and operating profit are expected to grow by 3% and 19%, respectively. Both sales and operating profit are expected to significantly exceed market consensus, showing clear growth.

Jeong Won-seok, a researcher at Hi Investment & Securities, explained, "This is because of the strong demand for TV and IT panels due to the non-face-to-face environment and the supply shortage of key components such as DDI, Glass, and PMIC, which has led to a sharp rise in LCD TV panel prices."

In fact, LCD TV panel prices rose by about 38% and 13% in the second half of last year and the first quarter of this year, respectively. The increase in the second quarter of this year is also expected to reach about 15%. While the profitability of panel manufacturers is improving, the profitability of TV set manufacturers is expected to deteriorate. Researcher Jeong said, "Considering that major TV set manufacturers have a strong willingness to expand production of OLED TVs, which are relatively more profitable, LG Display is understood to have raised the average price of OLED TV panels by about 10% from the second quarter," adding, "Gradual profitability improvement in the OLED TV panel sector is expected to lead to a return to profit in the second half."

Furthermore, since the second half is a seasonal peak, performance improvement is expected to accelerate further. Currently, the panel inventory level in the distribution market is low, and major set manufacturers are expected to accumulate inventory in the second half in preparation for the year-end peak season. Additionally, the rise in LCD TV panel prices due to the supply shortage of key components may continue. The supply shortage of DDI, which is essential for display driving, is likely to persist until the first half of next year. Researcher Jeong analyzed, "The continued rise in LCD TV panel prices also means that demand for OLED TV panels can increase further," and "Based on this, there is a high possibility of a quarterly profit turnaround in the OLED TV sector in the fourth quarter of this year."

Moreover, the P-OLED sector is expected to show a clear improvement in profitability in the second half due to the effect of the new iPhone product launch. Considering this, it is estimated that LG Display can record its highest-ever annual performance with sales of 30.095 trillion KRW and an operating profit of 2.818 trillion KRW this year.

Against this backdrop, Hi Investment & Securities maintained its investment opinion of "Buy" on LG Display and its target stock price of 36,000 KRW. The closing price on the previous trading day was 22,800 KRW.

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