[Click eStock] LG Display to Narrow Deficit Next Year... Target Price ↓

Daol Investment & Securities Report

[Asia Economy Reporter Minji Lee] Daol Investment & Securities maintained a neutral (HOLD) investment rating on LG Display on the 21st and lowered the target price from 15,000 KRW to 14,000 KRW.

LG Display's Q4 revenue is estimated to be 7.2769 trillion KRW, with an operating loss of 793.5 billion KRW. Revenue is expected to decrease by 17% year-on-year, and operating profit is predicted to turn negative. Although the POLED yield issue has been resolved, the weak demand for TV and IT panels is expected to sustain losses at the previous quarter's level.

Next year's projected revenue is 21.9037 trillion KRW, with an operating loss of 764.3 billion KRW. Revenue is expected to decline by 16% compared to this year, and the operating loss trend is anticipated to continue. However, the scale of losses is expected to decrease due to the suspension of loss-making product production and profitability-focused Fab operations.

The company is expected to shut down the LCD Fab, which faces difficulties in securing mid- to long-term profitability. By application, it is anticipated to focus on producing high value-added IT panels with relatively good profitability, while discontinuing production of TV panels that recorded losses.

Accordingly, the company's production capacity is estimated to sharply decrease from 46.4 last year to 28.8 next year. During the same period, LCD production volume is expected to decrease from 120,000 units per month for 7th generation and 380,000 units per month for 8th generation to 210,000 units per month for 8th generation next year.

Researcher Yangjae Kim of Daol Investment & Securities explained, "The depreciation of the company's LCD Fab has already ended, and only products with secured profitability will be produced, so a reduction in losses in the LCD sector is expected next year," adding, "The POLED yield issue, which was the main cause of large losses, is also understood to have been resolved."

Researcher Kim continued, "Capital expenditure is expected to have decreased from 4.3 trillion KRW this year to 2 trillion KRW," and emphasized, "Although there are concerns about going concern due to large losses, these concerns are excessive."

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