LGD, Target Price Up on Panel Price Increase

Stock Price Soars 13% This Month
Strong Q1 Earnings Expected

[Asia Economy Reporter Minji Lee] LG Display is expected to post strong first-quarter results, supported by rising panel prices due to delays in component supply.

At 1:32 PM on the 7th, LG Display was trading at 25,450 KRW, down 1.5% from the previous trading day. The stock price, which had been quiet around 18,000 KRW at the beginning of the year, surged about 13% this month before slightly declining. The rise in LG Display's stock price was driven by buying from institutional and foreign investors. Institutions purchased stocks worth 108.5 billion KRW, and foreigners bought 44.5 billion KRW worth of shares this month.

The buying interest in LG Display is interpreted as a result of upward revisions to its annual earnings outlook. According to financial information provider FnGuide, securities firms expect LG Display's first-quarter sales to reach 6.7781 trillion KRW, an increase of about 43.8% compared to the same period last year. Operating profit is estimated to turn positive, recording 456.6 billion KRW.

The expected strong first-quarter performance is due to significant improvements benefiting from rising panel prices. Since the second half of last year, LCD production has been disrupted due to component supply shortages. As of the end of last month, TV panel prices are estimated to have risen about 98% on average since April of last year.

Researcher Kwangjin Kim of Yuanta Securities said, "The first quarter is typically a seasonal low for demand in TV and IT product groups, but demand remained strong due to COVID-19," adding, "This demand is expected to offset the decline in POLED sales."

Industry insiders expect the upward trend in panel prices due to display component shortages to continue through the second and third quarters. Although the second quarter is traditionally a low season and uncertainties about sustained IT demand due to COVID-19 vaccinations are increasing, the rise in panel prices is expected to fully offset these factors. Researcher Yangjae Kim of KTB Investment & Securities analyzed, "Supply is still insufficient compared to demand for components, and if panel prices continue to rise through the second quarter, the current price levels will be maintained until the end of the year."

Accordingly, LG Display's annual sales are estimated to reach 28.1809 trillion KRW, a 16% increase from the previous year, exceeding the 26 trillion KRW estimated at the end of last year. Operating profit is predicted to turn positive at 1.6543 trillion KRW. The securities industry's target prices have also risen. Yuanta Securities raised its target price by 7% to 31,000 KRW, Samsung Securities also increased theirs by 7%, and KTB Investment & Securities upgraded its investment opinion to "buy" and raised its target price by 36% to 30,000 KRW.