Published 18 Apr.2023 08:40(KST)
On the 18th, KB Securities analyzed that LG Display is expected to turn profitable in the fourth quarter of this year due to an increase in the operating rate of organic light-emitting diode (OLED) panels and successful restructuring of the liquid crystal display (LCD) business starting in the second half of the year. Accordingly, the investment rating was upgraded from 'Neutral' to 'Buy,' and the target price was raised by 25% from the previous 16,000 KRW to 20,000 KRW.
Researcher Kim Dong-won of KB Securities explained, "▲ A successful exit strategy for this year's LCD TV panel production lines (Guangzhou, China, and Paju, Korea) is expected, leading to a reduction in losses for large LCD panels in the future, ▲ An increase in supply share of OLED panels for the iPhone 15, scheduled for release in the second half of this year, is anticipated, and ▲ The possibility of securing new customers for OLED TV panels has expanded compared to the past, and cost structure improvements are estimated due to increased operating rates of large OLED panel production lines in 2024."
Researcher Kim forecasted that the performance improvement of LG Display's OLED business will begin in earnest from the second half of this year through 2024. He analyzed that cost structure improvements will be achieved across all OLED panel business sectors, including small, medium, and large sizes.
He stated, "LG Display is expected to incur an unavoidable loss of 2 trillion KRW due to line shutdowns from LCD business restructuring and poor operating rates of OLED panels," but added, "Profitability is expected to turn positive from the second half of the year, with a significant performance improvement estimated for 2024, including sales of 26.4 trillion KRW and operating profit of 808 billion KRW."
He continued, "In the case of the LCD business, the large-scale losses from the LCD TV panel business, which recorded significant deficits over the past two years, will disappear as the business ends, and small- and medium-sized and automotive OLED segments are expected to expand profit margins due to increased market share and order backlog," adding, "Large OLED panels are expected to turn profitable due to increased operating rates from securing new customers."
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