[Click eStock] "LGD, 2Q Loss Expansion Inevitable... Will Turn Profitable in Second Half"

[Asia Economy Reporter Lee Myunghwan] Hana Financial Investment announced on the 23rd that it maintains a buy rating and a target price of 27,000 KRW for LG Display. Although the company's profitability is expected to deteriorate in the second quarter of this year, the reason is that the practical benefit of selling is not significant.

Hana Financial Investment forecasts LG Display's second-quarter sales this year to decrease by 16% year-on-year to 5.9 trillion KRW, with an operating loss of 123 billion KRW, turning to a deficit compared to last year. Initially, after the first-quarter earnings announcement, an operating profit of 4.6 billion KRW was expected for the second quarter, but the company explained that it significantly lowered the profitability forecast due to a larger-than-expected decline in LCD panel prices in both the TV and IT sectors.

The TV panel sector, which accounts for 26% of sales, is expected to see a 23% decrease in sales compared to the same period last year due to price declines caused by reduced panel orders amid weakening demand. However, the production volume of organic light-emitting diode (OLED) TV panels is expected to increase by more than 80% compared to the previous quarter due to inventory depletion by customers. Accordingly, TV sales are forecasted to increase by 23% compared to the previous quarter.

The IT sector, accounting for 48% of sales, is expected to see a decline in sales compared to the same period last year as demand weakens, with Taiwanese notebook manufacturers' cumulative sales in the second quarter decreasing and IT panel prices continuing to fall. Profitability is also seen as inevitably worsening compared to the previous quarter. The mobile and other sectors are expected to see a 21% decrease in sales compared to the same period last year due to the off-season entry of North American customers and the impact of declining panel sales.

Hana Financial Investment forecasts LG Display's annual sales this year to decrease by 5% year-on-year to 28.4 trillion KRW, and operating profit to drop sharply by 81% to 434 billion KRW, making a significant profit decline inevitable compared to last year. However, in the second half of the year, despite the price declines of LCD TV and IT panels, operating profit is expected to turn positive due to the peak season effect from new product launches by OLED mobile sector customers.

Researcher Kim Hyunsoo of Hana Financial Investment said, "Although a deficit is expected in the second quarter, the second half will be the first quarter to record a profit in the LCD TV sector's deficit phase," and analyzed, "At the current historically lowest prices, the practical benefit of selling is not significant."

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