LG Display, Bright Screens but 'Questionable' Performance

Deficit Expected Again This Year... Limited Scope for LCD Panel Price Increases

[Asia Economy Reporter Minwoo Lee] LG Display is expected to continue its losses this year as well. It is analyzed that performance improvement will be difficult due to ongoing price competition under constraints that could raise LCD TV panel prices.

According to Eugene Investment & Securities on the 18th, LG Display's fourth-quarter results last year were estimated at sales of 6.1 trillion KRW and an operating loss of 650 billion KRW. The operating loss widened by about 220 billion KRW compared to the previous quarter. Although sales increased, losses have continued throughout last year. Despite massive investments over three years, the company failed to achieve external growth, worsening its financial structure. Due to one-time costs related to restructuring the Paju LCD TV line, losses expanded, and the annual results for last year are expected to show sales of 23.2 trillion KRW and an operating loss of 1.59 trillion KRW.

Seungwoo Lee, a researcher at Eugene Investment & Securities, said, "It is positive that the decline in LCD TV panel prices has stopped and an increase is expected, and that the operating loss is expected to shrink from the fourth quarter of last year and the first quarter of this year, as well as the significant growth expected in automotive displays." However, he pointed out, "Even considering this, LCD TV panels are still expected to maintain a supply surplus, limiting the extent of price increases. To turn a profit, the EBITDA, which was 2.2 trillion KRW last year, must increase to over 5 trillion KRW this year, but this seems unlikely." Additionally, since competitor Samsung Electronics is expected to lower the price of its 75-inch Micron LET TV to the 3 million KRW range in the future, the outlook is not very bright.

Losses are expected to continue this year as well. Eugene Investment & Securities forecast LG Display's sales at 23.7 trillion KRW and an operating loss of 550 billion KRW this year. The investment opinion was maintained at 'Hold' with a target stock price of 16,000 KRW. The closing price on the 17th was 15,850 KRW.