[Edaily Reporter kyoungeun kim ] An analysis suggests that while LG Display(034220)will continue to post an operating loss in the second quarter due to one-time restructuring costs, the company could achieve an annual profit in the trillions of won for the first time in five years, driven by record-high shipments of plastic organic light-emitting diode (P-OLED) panels for mobile devices in the second half of the year.
Kang Min-gu, an analyst at IBK Investment & Securities, made this statement in a report released on the 25th, maintaining a “Buy” rating and a target price of 20,000 won for LG Display. This represents an upside potential of 64.2% compared to the current stock price (12,180 won).
Second-quarter results are expected to fall short of market expectations, with revenue of 5.602 trillion won (up 0.3% year-over-year) and an operating loss of 115.5 billion won (continuing losses). Analyst Kang stated, “We estimate that operating profit will fall short of the consensus due to one-time costs associated with restructuring and voluntary retirement programs,” adding, “Excluding workforce reduction costs, we estimate that operating profit has recovered to around 90 billion won, despite the mobile off-season.”
Starting in the second half of the year, mobile P-OLEDs are expected to drive earnings; third-quarter revenue is estimated at 7.02 trillion won (+0.6%), with operating profit at 510.9 billion won (+18.6%). Analyst Kang noted, “We forecast this year’s P-OLED shipments to reach a record high of over 80 million units,” citing three reasons. He explained that this is due to the arrival of the seasonal peak as client launch dates approach, the company benefiting from competitors’—specifically Chinese panel manufacturers—failure to secure sufficient supply, and an expected increase in production volume through the optimization of IT OLED fabs, which have been operating at low capacity utilization rates.
Accordingly, the firm projected annual revenue of 25.943 trillion won (+0.5%) and operating profit of 1.204 trillion won (+132.9%) for this year. Analyst Kang emphasized, “Although we have revised the operating profit estimate downward by 12% from our previous forecast due to one-time costs, we maintain our view that the company will achieve a trillion-won profit for the first time in five years.”
Analyst Kang stated, “The effects of the business transition toward OLED and the structural improvements resulting from restructuring are now taking full effect,” adding, “The investment in new facilities announced in the first quarter is part of our efforts to defend market share with North American clients, and from a medium- to long-term perspective, we anticipate a solid position within the high-end OLED market.”