[Edaily Reporter Kim Hyung-il ] Shinhan Investment Securities forecasts that the improvement in profitability for LG Display(034220)will be slower than expected due to the decline in the won-dollar exchange rate and the impact of “chipflation,” and has set a target price of 13,000 won, a 19% reduction from the previous level.

On the 6th, Park Hyun-woo, a senior analyst at Shinhan Investment Securities, estimated that LG Display’s third-quarter revenue this year would total 6.6 trillion won, a 5% year-over-year decline, while operating profit would fall 31% to 297.7 billion won. He projected that operating profit would come in 20% below the consensus estimate of 370.3 billion won.

The primary cause of the earnings slowdown is the exchange rate. The average won-dollar exchange rate for the third quarter is expected to be 1,423 won, down 5% from the previous quarter and 3% lower than the previously applied rate of 1,460 won. Accordingly, reflecting a negative exchange rate effect of around 100 billion won and intensifying pressure to lower panel prices, the third-quarter operating profit estimate was lowered by 31% from the previous forecast.

Mobile organic light-emitting diode (OLED) shipments in the second half of the year are projected to increase by 16% year-over-year. In contrast, IT OLED shipments are expected to remain sluggish due to price hikes caused by “chipflation” and slowing demand.

Large-size shipments are projected to increase by 17% year-over-year, driven primarily by OLED monitors. The share of monitors is expected to rise from about 20% this year to the mid-to-high 20% range next year. The analysis noted that if capacity utilization rates continue to rise and demand expands, attention should be paid to whether the company will utilize its idle production line—capable of producing 45,000 panels per month—within its large-size production capacity.

Researcher Park stated, “While panel shipments remain robust, the decline in profitability in Chonbang sectors is increasingly spreading throughout the entire supply chain,” adding, “We have adjusted our target price-to-book (P/B) ratio in light of the downward revision to the return on equity (ROE).”