[Click eStock] LG Display "Metaverse Beneficiary Stock"

[Asia Economy Reporter Lee Seon-ae] KB Securities announced on the 2nd that it maintains a buy rating and a target price of 25,000 KRW for LG Display (2022 price-to-book ratio (PBR) of 0.6). This is because ① OLED integration is essential for realistic 3D video implementation in metaverse devices (AR, VR, XR), and LG Display, which holds a monopolistic share of OLED panels (No.1 in large OLED, No.1 in automotive OLED, No.2 in small and medium OLED), is expected to benefit, and ② the large OLED (OLED TV panel) division, which began operations in 2013, is projected to turn profitable in Q4 this year, transforming into a profitable business unit eight years after its launch, thereby securing a revenue structure that will sufficiently offset profit declines caused by falling LCD panel prices.

Currently included in the TIGER Fn Metaverse ETF, LG Display is expected to be added to other metaverse ETFs in the future. Dongwon Kim, a researcher at KB Securities, explained, "This is because companies closely related to LG Display, such as Apple, Microsoft, Facebook, and Google, are expected to launch various metaverse devices from 2022, equipping them with OLED for realistic video implementation. Furthermore, OLED, which has advantages in response speed, high resolution, and lightweight design, is emerging as the optimal display for metaverse virtual screens, enabling uninterrupted and stable left-right eye tracking."

In 2022, Samsung Electronics is highly likely to enter the OLED TV market. Samsung's entry into the OLED TV market is expected because global premium TV demand (2021E +30% YoY) continues to grow centered on OLED, unlike the overall TV market's decline, necessitating a change in product composition. In particular, LG Display's Q4 operating profit for OLED TV panels is estimated at KRW 144.9 billion (operating margin 6.8%), indicating that LG Display can fully achieve its 2022 profitability guidance for OLED TV panels (operating margin in the mid-to-high single digits). Especially, the sales proportion of LG Display's large OLED division is expected to increase (19% in 2021 → 24% in 2022), while the sales proportion of large LCD (LCD TV panels) is expected to sharply decrease (16% in 2021 → 9% in 2022), suggesting that sensitivity to earnings fluctuations due to LCD panel price declines will be significantly lower than in the past.

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