[Click eStock] "LG Display to Record Loss in Q2"

KB Securities Report

[Asia Economy Reporter Minji Lee] On the 1st, KB Securities downgraded LG Display's investment opinion to HOLD and lowered the target price by 22% to 17,000 KRW. This adjustment is due to lowered performance forecasts for this year and next, caused by decreased demand for TVs and PCs and a sharp drop in LCD panel prices.

In the second quarter, the company’s sales are expected to reach 5.9 trillion KRW, with an operating loss of 270.6 billion KRW. Due to weak demand for LCD and OLED panels and increased fixed cost burdens from reduced operating rates, the operating loss is projected to significantly exceed the market expectation of 59 billion KRW. An operating loss of 51.9 billion KRW is also forecasted for the third quarter.

Dongwon Kim, a researcher at KB Securities, stated, “The inventory levels of the top five global TV manufacturers are high, and the three major global PC companies?DELL, HP, and Lenovo?are also reducing their PC shipment plans for the second half of the year, so the demand slowdown for TVs and PCs is expected to continue in the latter half.”

Currently, the global LCD panel market is facing a difficult operating environment due to aggressive price cuts by Chinese companies aiming to expand their market share. The industry is simultaneously experiencing a double burden of demand slowdown for TVs and PCs caused by inflation, making it practically difficult to find any reversal momentum that could improve LCD panel supply and price declines in the future.

Researcher Dongwon Kim analyzed, “Although the decline in LCD panel prices due to IT demand slowdown continues, the prices of key components of LCD panels, which showed supply shortages last year, as well as foundry costs and logistics expenses, have either risen sharply or remained at existing levels. The cost burden on LCD panel manufacturers is expected to increase further.”