[Click eStock] "LG Display 'Sangjeohago'... Multiple Normalization Expected in Second Half"

[Asia Economy Reporter Myeonghwan Lee] Mirae Asset Securities announced on the 27th that it has upgraded its investment opinion to Buy due to the increased upside potential following the decline in LG Display's stock price. The target price was maintained at 26,000 KRW.

LG Display's sales in the fourth quarter of 2021 were 8.8 trillion KRW, with an operating profit of 476 billion KRW. While sales increased by 22% compared to the previous quarter, operating profit decreased by 10%. Researcher Cheoljoong Kim of Mirae Asset Securities analyzed, "Sales exceeded initial expectations, but operating profit fell short of both our estimates and market forecasts." The reasons for the weak operating profit included ▲a steeper-than-expected decline in LCD panel prices ▲one-time costs such as performance bonuses.

Mirae Asset Securities stated that the decline in LCD prices is progressing faster than expected and revised down the company's expected operating profit for this year from 1.5 trillion KRW to 1.3 trillion KRW, a 14% decrease. Researcher Kim explained, "As the display market enters the off-season, the price decline of IT LCDs has been accelerating since January."

Mirae Asset Securities analyzed that LG Display will show a clear "low in the first half, high in the second half" pattern this year, with multiple normalization expected to occur during the second half. At the same time, it forecasted that the point at which organic light-emitting diode (OLED) operating profit surpasses that of LCD will be somewhat accelerated.

Researcher Kim said, "If the slowdown in the IT LCD market accelerates, the closure of remaining LCD lines may be brought forward," adding, "From a mid- to long-term perspective, there is a possibility of further downward revisions to sales and profit estimates and the reflection of one-time costs."

He continued, "Flexible business strategies will be essential depending on future global market conditions and competitors' situations," and predicted, "Meaningful multiple normalization will proceed after uncertainties are resolved."