[Click eStock] "LG Display, Q2 Earnings Exceed Expectations"

IBK Investment & Securities Report
Operating Profit Expected to Reach 518 Billion KRW

[Asia Economy Reporter Minji Lee] IBK Investment & Securities maintained its buy rating and target price of 33,000 KRW for LG Display on the 16th.

LG Display's second-quarter revenue is expected to increase by 2.2% from the previous quarter to 7.035 trillion KRW. Shipment area is estimated to rise by 11.4% during the same period to 9,481 ㎢, while the average selling price is projected to fall by 4.9% to 700 USD/㎥. Kim Unho, a researcher at IBK Investment & Securities, explained, "The increase in shipment area is due to steady demand for TV and IT panels," adding, "The average selling price is expected to decline by 4.9% compared to the first quarter due to a reduction in P OLED volume and a worsening product mix."

Operating profit is expected to be 518 billion KRW, similar to the first quarter. Profitability is anticipated to improve compared to the first quarter due to rising LCD panel prices, and large OLED panels are also expected to see a slight improvement in profitability as operating rates increase with higher volumes, reducing the scale of losses compared to the first quarter. However, P OLED is likely to see an increase in operating losses compared to the previous quarter due to a higher fixed cost ratio caused by decreased volume.

The upward trend in LCD TV panel prices, the most critical variable for securing profitability, is expected to continue. Although some forecasting agencies predict that LCD TV panel prices will stabilize from July, IT panel prices are expected to maintain their upward trend. Researcher Kim stated, "As long as there is no sharp price decline, stable operating profits can be secured," and analyzed, "Profitability in the OLED segment will gradually improve."

The company's operating profit for this year is predicted to exceed 2.4 trillion KRW. This expectation is based on the anticipated continued rise in LCD panel prices through the third quarter and stable shipment growth due to mass production from the new P AMOLED line, making a turnaround to operating profit possible this year. Researcher Kim Unho said, "The operation of the new large OLED line has laid the foundation for external growth," and added, "The initial cost structure deterioration can be quickly overcome through production efficiency."