[THE INVESTOR] LG Display’s earnings outlook is significantly murky, said Hanwha Investment and Securities on Dec. 11, downgrading the recommendation to a “hold” from a “buy” and lowering the target price to 34,000 won (US$31.11) from 37,000 won.
The LCD panel industry has begun to slide faster than expected, said analyst Lee Sun-hak, estimating that LG Display’s fourth-quarter operating profit will come in at 211 billion won, 38.5 percent lower than market consensus.
Its earnings will continue to decline for a the time being as panel prices continue to weaken until the first quarter of next year, while the OLED sector will be burdened by rising R&D and depreciation costs, said the analyst.
It will take an upturn in the second quarter of 2018 at the earliest when the panel price stabilizes and shipments increase, but it will still depend on securing a yield for mobile OLED, added Lee, lowering the estimate of LG Display’s operating profit next year almost by half to 710 billion won.
Investors could wait until the manufacturing yield of its new OLED factory stabilizes in the second half of 2018, noted the analyst.
By Hwang You-mee (firstname.lastname@example.org)