[Click eStock] "LG Display Expected to Return to Profit After 3 Years... Target Price Up"

Target Price Raised by 33% Compared to Previous Estimate

On the 3rd, KB Securities raised the target price for LG Display from 12,000 KRW to 16,000 KRW, expecting the company to return to profitability in the second half of this year for the first time in three years. The investment rating was maintained as 'Buy.'

Dongwon Kim, a researcher at KB Securities, explained, "The target price adjustment is due to an expected improvement in operating profit of around 3 trillion KRW over the next two years, driven by increased utilization rates from expanded OLED panel shipments. As a result, the operating loss forecast for 2024 was revised from 538.2 billion KRW to 289.2 billion KRW, and the operating profit for 2025 was significantly raised from 151.6 billion KRW to 527.1 billion KRW." He added, "In particular, shipments of small and medium-sized OLED panels this year are expected to reach 68 million units, with the supply share to North American clients expanding from 24% in 2023 to 33%. For the large OLED panel business, shipments are projected to increase to 6.2 million units due to increased orders from LG Electronics, resulting in a reduction of losses by more than 700 billion KRW compared to the previous year. Therefore, LG Display's operating profit in the second half of this year is estimated at 414.8 billion KRW, marking a return to profitability for the first time since the second half of 2021," he added.

Second-quarter results this year are expected to significantly exceed market expectations. Researcher Kim stated, "LG Display's second-quarter revenue is projected at 6.4 trillion KRW, a 36% increase compared to the same period last year, with an operating loss of 234.5 billion KRW, narrowing the deficit and greatly surpassing the consensus operating loss estimate of 352 billion KRW. In particular, the operating loss in the second quarter is expected to shrink to two-thirds compared to the previous year and to half compared to the previous quarter." This strong performance is attributed to shipments of large and small-to-medium OLED panels increasing by more than 50% year-over-year in the second quarter.

A turnaround in performance is anticipated next year for the first time in three years. Researcher Kim said, "From next year, LG Display's large OLED panel business is expected to improve performance due to the end of depreciation in the second half of next year and increased volume from new customers. Stable volume securing in medium-sized OLED, expansion of small-to-medium OLED market share, and increased OLED proportion in automotive displays are expected to establish a profit trend. The operating loss for LG Display in 2024 is forecasted at 289.2 billion KRW, a reduction of 2.2 trillion KRW compared to 2023, and operating profit is estimated at 521.7 billion KRW in 2025, marking a performance turnaround for the first time in three years since 2021," he said.