[Edaily Reporter Kim Hyung-il ] iM Securities analyzed that while LG Display(034220)is expected to see earnings recovery driven by expanded supply of organic light-emitting diode (OLED) panels for iPhones and the seasonal peak period, the high debt burden will likely constrain the stock’s revaluation. Accordingly, the firm maintained its “Buy” rating but lowered the target price to 10,000 won.

On the 23rd, Jeong Won-seok, an analyst at iM Securities, estimated that LG Display’s third-quarter consolidated revenue totaled 6.3 trillion won, a 10% decrease year-over-year but a 12% increase quarter-over-quarter. He noted that operating profit stood at 253 billion won, down 41% year-over-year but marking a return to profitability compared to the previous quarter. He added that these results were in line with recently lowered market expectations of 6.6 trillion won in revenue and 259.1 billion won in operating profit.

The results were weighed down by the depreciation of the won against the dollar, downward pressure on prices for plastic organic light-emitting diode (P-OLED) panels supplied to Apple, and a slowdown in demand for information technology (IT) devices due to rising memory semiconductor prices. The company explained that as rising memory prices led to higher prices for finished products, demand for laptops, monitors, and watches remained sluggish.

Apple, a major customer, raised prices for iPads and MacBooks by approximately 20–30% last June. Due to the resulting decline in demand, LG Display’s shipments of LCD and OLED panels for IT devices are estimated to have fallen by about 10% quarter-over-quarter, even during the seasonal peak period. In contrast, demand for iPhones is understood to have remained robust despite a roughly 10% increase in their selling prices. This is because production disruptions at Chinese smartphone manufacturers are creating an opportunity for Apple to expand its market share.

The supply outlook for the iPhone is positive. While Samsung Display is the exclusive supplier of OLED panels for foldable iPhones, LG Display’s supply share is expected to expand for the “bar-type” iPhone 18 series. However, analysts note that as customers face rising component costs, pressure to lower panel prices is increasing, which is expected to limit improvements in profitability.

In the fourth quarter, earnings are expected to recover, driven by the seasonal peak, with a focus on large-sized OLEDs and smartphone OLEDs. As the proportion of shipments for gaming monitors increases, large-sized OLED shipments are projected to rise by approximately 9% compared to the previous quarter, and smartphone OLED shipments are also expected to grow by about 20% due to the launch of new products by major clients.

Reflecting these factors, the fourth-quarter revenue forecast stands at 6.6 trillion won—a 9% decrease year-over-year but a 5% increase quarter-over-quarter. Operating profit is estimated at 362 billion won, representing a 115% increase year-over-year and a 43% increase quarter-over-quarter. However, analysts believe that a weakening exchange rate, slowing demand for IT devices due to rising memory prices, and rising raw material costs will limit the extent of the earnings improvement.

Financial burdens remain a key challenge. Net debt at the end of the third quarter stood at approximately 11 trillion won; applying a simple annual interest rate of 5% would result in an annual financial burden of about 550 billion won. While earnings are gradually stabilizing through a business restructuring centered on OLEDs and cost reductions, analysts note that the high debt burden is constraining growth in net income and improvements in book value per share (BPS).

New technologies and businesses, such as FLiPP and glass interposers for semiconductor packaging, could serve as catalysts for a revaluation of the company’s enterprise value in the future; however, it was determined that more time is needed to confirm their commercialization potential and contribution to earnings.

Analyst Jeong stated, “The current stock price stands at a 12-month forward price-to-book (P/B) ratio of 0.55x, which is below the average of 0.79x observed during profitable periods since 2010,” adding “However, given that the potential for a sustained upward trend may be limited due to the high debt burden, a valid strategy would be to buy at the lower end of the valuation range during price corrections—while confirming improvements in the financial structure driven by earnings recovery—and capitalize on rebounds within the current trading range,” he said.