[Click eStock] "LG Display, Earnings Downgraded Due to Demand Slowdown"…Target Price Down 19%

[Asia Economy Reporter Ji Yeon-jin] Samsung Securities announced on the 30th that it has adjusted its earnings forecast for LG Display due to increased inventory and weakened demand, lowering the target price by 19% from the previous level to 21,000 KRW.

Jang Jeong-hoon, a researcher at Samsung Securities, explained, "The reason for maintaining a buy rating is that the LCD risk, which has fallen 40% since the beginning of the year, is somewhat reflected in the stock price," adding, "Currently, the stock price is at about 0.4 times the expected price-to-book ratio (PBR) for this year, and unlike in the past, the structure is improving from being concentrated on LCD to a mix with OLED, but it is judged to be excessively undervalued compared to competitors."

LG Display's second-quarter sales are expected to be 6.3 trillion KRW, with an operating loss of 211.4 billion KRW, which is a larger deficit than the previous 68.6 billion KRW. For OLED large panels, full operation is also estimated to be difficult due to weakened market demand.

Annual sales for this year have been revised downward to 25 trillion KRW, and operating profit to 39 billion KRW. Researcher Jang said, "Because the panel price decline and lower operating rates overlap, it is judged that a return to losses in the second and third quarters is inevitable," adding, "In some TV panels, prices have fallen to near cash cost levels, so production cuts within the industry seem unavoidable, but it is difficult to predict production cuts that would cause a short-term rebound in panel prices."