[Click eStock] "LG Display, Expected Improvement in OLED Profitability"

Q3 Earnings Miss Consensus... Impact of LCD Panel Price Decline
Hana Financial Investment "LG Display Target Price Lowered from 35,000 KRW to 27,000 KRW"

[Asia Economy Reporter Gong Byung-sun] LG Display posted third-quarter results this year that fell short of market consensus. Profits declined as TV demand worsened and liquid crystal display (LCD) panel prices dropped. However, profitability in the organic light-emitting diode (OLED) segment is expected to improve starting from the fourth quarter.

According to Hana Financial Investment on the 28th, LG Display's third-quarter sales rose 7% year-on-year to 7.2 trillion won, and operating profit increased 222% over the same period to 528.9 billion won. These figures were 5.65% and 20.89% below the respective consensus estimates.

The decline in LCD panel prices impacted the results. Prices fell more sharply than expected, causing performance to fall short of consensus. The TV segment, which accounts for 32% of LG Display's sales, saw panel shipments limited due to weakening TV demand. As a result, TV segment sales decreased 12% quarter-on-quarter despite the peak season.

The mobile segment underperformed expectations due to semiconductor shortages. Although a North American client launched a new product, production disruptions prevented significant profits. Mobile segment sales showed little change quarter-on-quarter but declined 13% year-on-year.

However, profitability is expected to improve in the fourth quarter, supported by the OLED segment. OLED TV and mobile segments are projected to increase fourth-quarter sales by 14.72% and 78.28% quarter-on-quarter, respectively.

Kim Hyun-soo, a researcher at Hana Financial Investment, explained, “The OLED segment's sales proportion in the fourth quarter is expected to be 43% of the total,” adding, “The profitability improvement effect of the OLED segment will outweigh the profit decline in the LCD panel segment.”

Accordingly, Hana Financial Investment maintained its ‘Buy’ rating on LG Display but lowered the target price from 35,000 won to 27,000 won. The previous day's closing price was 18,500 won.

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