[Click eStock] "LG Display, Earnings Momentum Continues... Target Price Up"

[Asia Economy Reporter Song Hwajeong] Shinhan Financial Investment raised the target price for LG Display from 30,000 won to 32,000 won on the 4th, expecting continued performance momentum due to rising LCD TV panel prices and strong iPhone sales. The investment rating was maintained at 'Buy.'

Expectations for earnings growth are increasing due to rising LCD TV panel prices and strong iPhone sales. The expansion of LCD TV sales by TV set manufacturers and a shortage of LCD component supply have sustained the upward trend in LCD TV panel prices. In February, the open-cell prices for 32-inch and 55-inch panels were $71 and $191 respectively, up 9.2% and 7.9% compared to December. Strong sales of the iPhone 12 continue, and the iPhone 13, scheduled for release in the second half of the year, is likely to exceed market expectations. Shinhan Financial Investment forecasts total iPhone sales this year to reach 240 million units, a 20% increase from the previous year.

Strong performance in the organic light-emitting diode (OLED) business is also expected this year. With the Guangzhou OLED TV line in China operating at full capacity, OLED TV panel sales are projected to increase by 71.7% year-on-year to 7.87 million units. Production of 48-inch OLED TV panels is increasing significantly, and production of 32-inch OLED TV panels is also set to begin. Plastic OLED (POLED) is expected to return to profitability. Researcher Soh Hyuncheol of Shinhan Financial Investment said, "Due to a sharp increase in POLED panel sales to strategic customers, POLED panel revenue is expected to rise 68.8% year-on-year to 4.6 trillion won," adding, "For the first time ever, the POLED panel business will record a profit, contributing to overall performance improvement."

Supported by this, a return to profitability is expected for the first time in three years. Researcher Soh said, "Due to rising LCD TV panel prices and strong POLED panel sales to strategic customers in the first quarter, operating profit is expected to reach 578 billion won, exceeding consensus in a surprise earnings report," and forecasted, "Annual sales this year will increase 23.4% year-on-year to 29.9 trillion won, and operating profit will turn positive at 1.92 trillion won for the first time in three years."

Researcher Soh explained, "Considering the first quarter earnings surprise and normalization of the POLED business, the target price was raised by 6.7%," adding, "Recently, TV set manufacturers are strengthening their OLED TV lineups, leading to a revaluation of LG Display's OLED TV business value."