[Click eStock] "LG Display, Focus on Growth Value of Vehicle Displays"

Yuanta Securities Report
Target Price Raised by 38%

[Asia Economy Reporter Minji Lee] Yuanta Securities on the 28th issued a buy rating and raised the target price for LG Display by 38% from the previous level to 29,000 KRW. This is based on the proven profitability in the OLED sector and the increased value of growth potential in the automotive display segment.

In the fourth quarter of last year, LG Display recorded sales of 7.46 trillion KRW, a 16% increase compared to the same period last year. Operating profit turned positive at 685.5 billion KRW. Due to significant profitability improvement surpassing market expectations, the annual operating loss was reduced to about 29.1 billion KRW.

Researcher Kwangjin Kim of Yuanta Securities said, “Profitability improvement across TV and IT product lines was achieved due to an unusual rise in LCD panel prices,” adding, “The supply volume of POLED for iPhone 12 increased by 101% compared to the previous quarter, which appears to have generated economies of scale.”

The expected performance for the first quarter of this year is sales of 6.74 trillion KRW and operating profit of 321.8 billion KRW, down 9.6% and 53.1% respectively from the previous quarter. Although a decrease in POLED supply volume compared to the previous quarter is inevitable, due to continued strong sales of the iPhone 12, the supply volume is expected to more than double compared to the same period last year.

Additionally, as the rise in LCD panel prices continued in January and is expected to persist until the end of the first quarter, the profit contribution from the LCD segment is expected to remain solid.

Attention should also be paid to the growth value of automotive displays. The company plans to convert the AP3 LCD fab from existing mobile panel production facilities to an automotive display line. It is estimated to be about 30K units per month, and as in-car experience becomes more important, automakers are attempting to differentiate their car infotainment systems.

Researcher Kwangjin Kim said, “Displays are the most essential components, and as we move toward the era of autonomous driving, the importance of car infotainment will increase further,” adding, “Although automotive display sales are currently minimal, they will become an important growth driver in the mid to long term.”