[Click eStock] "LG Display, LCD TV Panel Price Decline... Target Price Down 14%"

[Asia Economy Reporter Minji Lee] Shinhan Financial Investment maintained a buy rating on LG Display on the 29th and set the target price at 12,500 KRW, down 14% from the previous level. This decision is based on the judgment that the profit improvement margin may decrease as the decline in LCD TV panel prices continues.

In April, the price of LCD TV panels, which had been rising since December last year due to the novel coronavirus infection (COVID-19), reversed to a decline. Recently, TV set manufacturers have lowered their demand for LCD TV panels by about 20% compared to the previous forecast for this year.

In May, the prices of 32-inch, 55-inch, and 65-inch LCD TV panels were $33, $107, and $166 respectively, down 8.3%, 4.4%, and 3.4% compared to April. Researcher Soh Hyun-chul of Shinhan Financial Investment said, “The decline in LCD TV panel prices is expected to continue in June,” and predicted, “Second-quarter sales will be 4.866 trillion KRW, down 9% year-on-year.” Operating losses are expected to be 340 billion KRW, below the market estimate of -325 billion KRW.

From the end of the second quarter, POLED for smartphones aimed at strategic customers is scheduled to be supplied. The sales volume of smartphone POLEDs this year is expected to be more than three times that of the previous year. Researcher Soh said, “This means that the operating loss in the POLED business could be reduced by 696 billion KRW, and in 2021, the POLED business is expected to turn an operating profit not only through smartphone POLED sales but also through the expansion of automotive POLED sales.”

The Guangzhou OLED TV line in China plans to adjust its operating rate after confirming the trend of OLED TV orders in the third quarter. Recently, Japanese TV manufacturers have been strengthening their OLED TV lineups in the domestic market, so demand for OLED TVs in the second half of the year is expected to improve.

Researcher Soh Hyun-chul said, “Considering the continued decline in LCD TV panel prices in the second quarter and the ongoing operating losses this year, we are lowering the target price. However, it is positive that the OLED business could normalize in the second half of the year.”