[Click eStock] "LG Display, OLED Profit Expected in Second Half"

[Asia Economy Reporter Song Hwajeong] Korea Investment & Securities maintained its 'Buy' rating and target price of 35,000 KRW for LG Display on the 19th, forecasting that the OLED division will turn profitable starting from the third quarter.

Operating profit is expected from the mobile and TV OLED businesses beginning in the third quarter. Jeonghwan Kim, a researcher at Korea Investment & Securities, stated, "Without additional capacity expansion, OLED shipments in the second half are expected to increase by 29% year-on-year to 30 million units for mobile and by 42% to 4.2 million units for TV, resulting in improved utilization rates and higher profit margins." The profit increase from OLED is expected to offset the profit decline from LCD. In the second half, LCD panel area demand and prices are expected to decline due to a slowdown in TV demand (forecasted to decrease by 7% year-on-year). Kim explained, "Despite the decrease in LCD in the second half, the profit rebound from OLED is greater," adding, "OLED TV will turn profitable in the third quarter, and with increased mobile OLED shipments in the peak fourth quarter, OLED will generate operating profits comparable to LCD." Operating profit for the third quarter is projected to rise 17% from the previous quarter to 786.6 billion KRW.

Operating profit in the second quarter increased by 28% from the previous quarter to 671.3 billion KRW, aligning with the recently raised market consensus. Kim analyzed, "The increase in LCD profits due to additional rises in LED panel prices outweighed the expanded losses from decreased mobile OLED shipments," noting, "OLED TV panel prices rose about 5% quarter-on-quarter, and higher utilization rates reduced losses." According to market research firm Omdia, LCD panel prices rose on average 18% quarter-on-quarter, with TV panels up 12-21%, notebook PC panels up 9-23%, and monitor panels up 12-25%, exceeding early quarter estimates by more than 3 percentage points.

With increased utilization rates, OLED business is expected to contribute 35% of operating profit in the second half of this year and rise to 68% next year. Kim stated, "The penetration rate of OLED and diversification of applications are accelerating the display industry's transition to OLED," adding, "LG Display's stock is still undervalued (PBR 0.7x) compared to Taiwanese panel makers that generate profits only from LCD."

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