According to iM Securities, LG Display is expected to report disappointing second-quarter results due to one-time costs associated with voluntary retirement programs. However, analysts believe that expectations for improved performance in the second half of the year remain valid. The target stock price is maintained at 17,000 won, with a 'buy' recommendation still in place.
Jung Won-seok, an analyst at iM Securities, forecasts that LG Display's revenue for the second quarter will reach 5.9 trillion won, a 5% increase from the same period last year, while operating losses are expected to hit 122 billion won, falling short of market expectations. This is attributed to significant one-time costs related to the recent voluntary retirement program.
Initially, the costs of the voluntary retirement program were estimated to be between 100 billion and 150 billion won, but actual expenses may exceed these projections. Consequently, despite the positive effects of the rising won-dollar exchange rate, the losses are anticipated to be larger than previously expected.
Excluding one-time costs, the actual operating profit is estimated to be around 128 billion won. Jung noted, "The weak performance in the second quarter is due to one-time factors rather than structural profitability issues," and emphasized that the trend of improving profitability centered on large OLED displays continues.
Looking ahead to the second half of the year, a seasonal peak is expected to drive performance improvements. Although concerns have been raised about declining smartphone demand due to rising memory semiconductor prices, it is noteworthy that Apple, a key client, is seizing the opportunity presented by production disruptions among Chinese smartphone manufacturers to expand its market share.
In particular, as Samsung Display is expected to supply OLED panels for foldable iPhones, changes in production capacity allocation could lead to an increase in LG Display's market share in the existing bar-type iPhone OLED panel market. Consequently, shipments of OLED panels for the iPhone 18 are projected to rise by 5% to 10% compared to the previous year.
Reflecting these factors, Jung has projected annual figures for this year, estimating revenue at 25.6 trillion won and operating profit at 1.2 trillion won, a 140% increase from the previous year.
However, he assessed that the potential for stock price increases is limited. "The current stock price is close to the average P/B level established during previous profit periods, indicating that expectations for a recovery in performance are largely reflected in the price," he said, recommending a cautious approach of buying during price corrections rather than aggressive expansion of holdings.
* This article has been translated by AI.
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