[Click e-Stock] "LG Display Returns to First-Quarter Profit After Three Years"

On April 25, Shinhan Investment Corp. maintained its "Buy" rating and target price of 11,000 won for LG Display, stating that "the company’s business advancement has been validated by its return to profitability in the first quarter."

Namgoong Hyun, a researcher at Shinhan Investment Corp., said, "LG Display’s first-quarter revenue was 6.1 trillion won, down 22.6% from the previous quarter, but its operating profit reached 33.5 billion won, surpassing the market consensus of a 30.7 billion won operating loss."

Despite the seasonal off-peak period, the company succeeded in returning to profitability through business advancement. Namgoong explained, "The improvement in product sales mix driven by business advancement centered on OLEDs (OLED share: 55%) was the main factor behind the return to profitability." He added, "The positive effects came from new product launches and increased market share among mobile clients, higher shipments of IT OLED products (tablets and monitors), and a favorable exchange rate environment."

For the second quarter, revenue is expected to decrease by 11.1% quarter-on-quarter to 5.4 trillion won, and an operating loss of 98.5 billion won is anticipated. Namgoong identified the main reasons as the suspension of LCD TV sales following the sale of the Guangzhou TV plant and a decrease in shipments due to the off-season for mobile devices. He noted that performance in the TV and mobile (including others) segments is expected to decline by 13% and 26%, respectively, and that a weakening exchange rate is likely to create an unfavorable environment.

He also stated, "The proceeds from the sale of the Guangzhou LCD TV plant in the first quarter have resulted in a meaningful cash inflow, which is expected to improve the company's financial structure." He added, "The current share price already reflects much of the macroeconomic uncertainty (with a 12-month forward price-to-book ratio of 0.6 times)."

Additionally, Namgoong commented, "Given the improvement in fundamentals resulting from increased market share and client diversification, a revaluation of the company's valuation is warranted." However, he noted, "Due to the heightened external uncertainty stemming from the ongoing US-China trade war, maintaining a valuation discount is unavoidable. According to the latest earnings conference call, it is a positive sign that there has been no confirmation of production site adjustment strategies or price-cutting pressure from clients so far."

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