[Click eStock] "LG Display, Q3 Profit Turnaround Expected... Target Price Up 33%"

[Asia Economy Reporter Park Jihwan] Cape Investment & Securities maintained a 'Buy' rating on LG Display on the 15th, expecting improved performance including a return to operating profit in the third quarter, and raised the target price by 33.3% from the previous 15,000 KRW to 20,000 KRW.

Researcher Park Seongsun of Cape Investment & Securities stated, "Profitability improvement due to POLED shipments to North American clients, improved demand for LCD TVs and rising panel prices, and WOLED Guangzhou Fab ramp-up are expected to lead to a return to profit in the third quarter."

He projected third-quarter sales of 6.75 trillion KRW, a 27.1% increase from the previous quarter, and an operating profit turning positive to 19.9 billion KRW. This is attributed to the rise in LCD TV panel prices due to LCD TV supply shortages, reduction of POLED losses from new product supplies to North American clients, and the ramp-up effect of the Guangzhou OLED fab, according to Park's analysis.

Demand for IT panels has also remained solid following the second quarter. Additionally, the prolonged COVID-19 pandemic has led to an increased proportion of high-spec products in both TV and IT panels compared to the second quarter, which is viewed positively. Researcher Park Seongsun explained, "This coincided with the ramp-up of the Guangzhou Fab, resulting in improved OLED TV panel shipments."

Researcher Park Seongsun said, "POLED is expected to significantly reduce losses due to increased E6 Fab utilization following the start of new smartphone supplies to North American clients," adding, "Even considering the seasonal decline in IT panel demand in the fourth quarter, if POLED volume expansion and continued rise in LCD TV panel prices are reflected, no significant performance fluctuations compared to the third quarter are expected."

He emphasized, "Although there is seasonality in the first half of the year, improvements in POLED have begun to appear, and WOLED is also undergoing structural business improvements due to volume expansion."