LG Display Heads for New Low After 'First Paid-in Capital Increase Since Listing'

Turned Profitable in Q4... Performance Improvement Expected Centered on Tablets and Vehicle OELD
LG Electronics, the Largest Shareholder Injecting '1 Trillion', Invests 500 Billion Despite Rights Offering

LG Display, which has been suffering from continuous losses due to worsening business conditions, has decided to conduct a paid-in capital increase for the first time in 19 years since its listing. This move aims to inject funds to cover the prolonged losses. Although the securities industry maintains a positive outlook that the display industry could rebound after next year, the stock price plummeted, hitting a 52-week low.

According to the Korea Exchange on the 20th, LG Display's stock price closed at 11,830 KRW the previous day, down 3.90% from the previous session. During the day, it dropped by more than 11%, falling to 10,940 KRW, marking a 52-week low.

The stock price slump is attributed to the paid-in capital increase plan. On the 18th, LG Display's board of directors approved a paid-in capital increase worth 1.3579 trillion KRW. It will be conducted through a rights offering followed by a general public subscription for any unsubscribed shares. The issue price is 9,550 KRW, and based on January 26 of next year as the record date, approximately 0.32 new shares will be allocated per existing share. The subscription dates are scheduled for March 6-7 next year, with the payment date on March 14. LG Display stated that about 400 billion KRW of the funds raised will be used to repay debt, while the remainder will be allocated for operating funds (550 billion KRW) and facility investments (420 billion KRW).

LG Display has recorded losses for five consecutive quarters from Q3 last year through Q3 this year. The cumulative loss during this period amounts to 3.616 trillion KRW. However, the quarterly loss margin has been gradually decreasing since it reached the trillion-KRW level in Q1 this year. Despite the unfavorable situation, the market had consistently speculated about a possible capital increase, which the company had denied. In March, LG Display borrowed 1 trillion KRW from LG Electronics at an interest rate of 6.06%. Nevertheless, as the overall demand remained weak and the situation did not improve, the company ultimately decided to proceed with the capital increase.

Despite the stock price slump, the securities industry views the investment case as valid, given the positive outlook for Q4 this year and beyond. Kim Unho, a researcher at IBK Investment & Securities, said, "Although a stock price decline due to the capital increase is natural, the expectation for additional growth through securing funds remains valid. Considering the industry conditions are expected to improve next year, the current stock price is deemed attractive."

There is a prevailing view that LG Display will successfully turn profitable in Q4. Nam Gung-hyun, a senior researcher at Shinhan Investment Corp., stated, "We forecast an operating profit turnaround of 100 billion KRW in Q4. Although front-end demand remains sluggish, some year-end demand is positive." He added, "Shipments in 2024 are expected to shift to growth, and there will be performance benefits from the expansion of tablets and automotive OLED."

Meanwhile, LG Electronics, the largest shareholder holding a 37% stake, will also participate in this paid-in capital increase. Following the 1 trillion KRW loan, LG Electronics will additionally invest about 494.1 billion KRW in this capital increase. LG Electronics stated in a disclosure, "We are participating in the capital increase to secure LG Display's financial soundness and ensure stable supply of display panels."