[Weekend Money] This Company’s Target Price Rises Despite Expected Q2 Losses

LG Display Expected to Post Second-Quarter Loss Due to One-Off Costs
Profitability of OLED Business Set to Improve in Second Half; Target Price Raised

Although LG Display is expected to post a loss in the second quarter of this year due to increased workforce restructuring costs, analysts say that a recovery momentum is anticipated in the second half, driven by higher shipments of mobile panels and improvements in its large-size organic light-emitting diode (OLED) business.

Jang Jeonghun, a researcher at Samsung Securities, stated in a report, "We estimate that LG Display's performance in the second quarter will amount to 5.7 trillion won in sales and an operating loss of 118.6 billion won. This is slightly below the market consensus, which expected an operating loss of 102 billion won."

The main reason for LG Display’s weak second-quarter results is attributed more to the one-off impact of increased workforce restructuring costs than to a decline in core business competitiveness.

Jang explained, "The workforce restructuring costs were higher than the market had anticipated. Excluding these one-off factors, the core business could have generated an operating profit of more than 100 billion won."

Samsung Securities also partially revised its annual outlook for LG Display this year. Reflecting the impact of workforce restructuring costs in the second quarter, it lowered its annual sales forecast to 25.3 trillion won and its operating profit forecast to 1.2 trillion won.

However, the company views that from the second half, there is a high possibility of improved profits due to increased shipments of mobile panels. Although there are concerns about volatility in end-demand due to IT component supply issues in the first half, the impact on high-priced product sales by key mobile clients is expected to be limited.

Jang said, "While volatility in end-demand is a concern due to IT component supply issues in the first half, it is unlikely to have a significant effect on sales in the high-end segments of mobile clients. Accordingly, LG Display's panel shipments are expected to reach a record high of 28 million units in the fourth quarter."

The large-size OLED business is also expected to contribute to improved profitability, as expanded sales of OLED panels for gaming monitors, in addition to the TV market, are likely to have a positive impact.

Jang stated, "Shipments in the large-size OLED segment are expected to increase from just over 6 million units in 2025 to just over 7 million units in 2026. As sales of gaming monitors, which are more profitable than TVs, remain strong, this will contribute to improved profitability."

Accordingly, Samsung Securities slightly raised its target price for LG Display to 17,000 won and maintained its 'Buy' rating. The upward revision in target price reflects changes in the price-to-book ratio (PBR) due to the average stock price increase of comparable companies. Currently, LG Display’s stock is trading at around 0.9 times its estimated 2026 price-to-book ratio (PBR), which is considered undervalued compared to global competitors.

Jang emphasized, "Comparable company China BOE is at 1.7 times, Taiwan AUO at 1.4 times, and Innolux at 2.3 times, placing LG Display in a significantly undervalued range. Once the one-off costs are settled and strong sales of mobile and large-size OLEDs continue in the second half, meaningful performance momentum can be expected."

This content was produced with the assistance of AI translation services.