[Click eStock] "LG Display's Weak Q1 Performance... Due to LCD Price Decline"

[Asia Economy Reporter Myung-Hwan Lee] DB Financial Investment evaluated on the 28th that LG Display's first-quarter performance this year fell short of expectations. However, it maintained a buy rating and a target price of 26,000 KRW, stating that it will adjust future earnings forecasts.

The company's first-quarter sales this year were 6.4715 trillion KRW, down 6% compared to the same period last year, and operating profit was 38.3 billion KRW, a 92.7% decrease from the previous year. Operating profit fell short of the market consensus of 148 billion KRW and also missed DB Financial Investment's more conservative estimate of 78 billion KRW, showing poor performance.

DB Financial Investment assessed that the company had a high dependence on LCD in the first half of the year. Although LG Display is shifting its business structure mainly toward organic light-emitting diode (OLED), OLED results are expected to appear strongly in the second half, so the company had no choice but to rely on LCD in the first half. In this situation, the decline in LCD prices in the first quarter caused a setback. It is estimated that all segments except IT LCD recorded losses, but the high-value-added IT LCD segment remained steady, helping the company avoid an overall operating loss, according to DB Financial Investment.

There is also an analysis that the situation in the second quarter will be worse. Although an increase in large OLED volume is expected in the second quarter, there is no improvement in other product lines, and the IT LCD segment, which is the main driver of earnings, is significantly affected by the lockdown in China. However, the OLED segment is expected to generate profits on an annual basis. It is analyzed that in the second half, there will be a concentration of increased shipments to overseas strategic customers for plastic OLED, supply of low-temperature polycrystalline oxide (LTPO) panels, a significant increase in large OLED volume, and product diversification.

Researcher Sung-Ryul Kwon of DB Financial Investment said, "Although macro uncertainties are not unique to LG Display, the earnings results show that the company appears too vulnerable to external variables," adding, "We look forward to OLED performance in the second half, but investors who believe in this are gradually decreasing, so communication that builds trust through investor relations (IR) and conference calls seems necessary."

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