[Click e Stocks] "LG Display, OLED Remains Strong but... Target Price Down"

[Image source=Yonhap News]

[Asia Economy Reporter Song Hwajeong] DB Financial Investment on the 23rd downgraded the target price of LG Display from 35,000 KRW to 30,000 KRW, reflecting component shortages and a sharp decline in TV panel prices, although the OLED business remains solid. The investment opinion was maintained as 'Buy.'

Kwon Seongryul, a researcher at DB Financial Investment, stated, "Reflecting the component supply shortage and the sharp drop in TV panel prices, we have lowered this year's operating profit forecast by 13%, and accordingly, the target price is also lowered by the same margin to 30,000 KRW." He added, "However, the performance of large OLED and POLED businesses is clearly emerging, and the sales deferred due to the component shortage can return to normal, so there is no situation to change the buy opinion."

Since August, the decline in TV panel prices has been steeper than expected. In the case of IT LCD, panel prices and demand remain strong, but some sales are deferred due to component shortages. Researcher Kwon said, "Considering this situation, the third-quarter operating profit is expected to fall short of the initial forecast, reaching 601.3 billion KRW," and added, "The performance of OLED is trending upward, but more strength from OLED is still needed."

The OLED business remains robust. Researcher Kwon analyzed, "Even as the overall TV market cools down, consumer acceptance of OLED TVs has become more distinct, and shipments from OLED TV makers such as LG Electronics and Sony remain solid." He continued, "Accordingly, LG Display's large OLED panel shipments in the third quarter are expected to increase by 19% compared to the previous quarter, reaching 2.2 million units, and are anticipated to pass the profitability threshold." POLED has firmly established itself as a second vendor for overseas strategic customers, with third-quarter volumes expected to increase by more than 40%. Researcher Kwon said, "Although supplying multiple models in this new lineup somewhat reduces performance efficiency compared to before, this is an issue that can be resolved over time," and added, "By 2022, when the E5 line will be utilized for automotive and smartwatch applications, the POLED business is expected to turn profitable."