[Click eStock] "LG Display Overcame a Tough Q2... Possible Rebound in the Second Half"

[Asia Economy Reporter Myunghwan Lee] DB Financial Investment announced on the 28th that it maintains a Buy rating and a target price of 21,000 KRW for LG Display. This is because, although the company posted disappointing results in the second quarter, improvement is expected in the second half of the year.

LG Display's sales in the second quarter of this year recorded 5.6073 trillion KRW, down 19.5% compared to the same period last year, and operating loss reached 488.3 billion KRW, turning to a deficit. DB Financial Investment evaluated that both sales and operating loss were disappointing results below expectations. The initial sales forecast was 6.0663 trillion KRW, and the expected operating loss was 335.5 billion KRW.

The causes of the poor performance were attributed to sluggish shipments of IT panels due to lockdowns in major Chinese cities, the off-season for plastic organic light-emitting diode (POLED), and the large OLED volume being below expectations due to the TV market slump. The continuous sharp decline in TV panel prices also overlapped at once, causing LG Display to record a loss for the first time in eight quarters. Despite a favorable KRW-USD exchange rate, DB Financial Investment assessed that the simultaneous impact of sluggish shipments and price declines was quite significant.

However, DB Financial Investment forecasted that a performance rebound is sufficiently possible in the second half of this year. They pointed out that as China's lockdown measures ease, IT panel sales are connecting to revenue. POLED volume in the third quarter is expected to double compared to the second quarter due to the scheduled launch of new models by overseas strategic customers. For large OLED, it is analyzed that volume increase is expected as TV manufacturers shift from inventory-focused production policies to resuming orders. However, it was noted that it is uncertain when the decline in TV panel prices will stop.

Kwon Seong-ryul, a researcher at DB Financial Investment, said, "The direction is expected to improve, but it is necessary to observe how much the improvement will be," adding, "The worst situation has passed, and from the perspective of valuation at the lowest point, we maintain a Buy rating."