LG Display to see stronger profits in Q4

By Kim Yoo-chul

LG Display is expected to report stronger profits in the fourth quarter owing to the strong demand for displays for TVs and smartphones, analysts said, Friday.

“LG Display is likely to surprise the market in the last quarter by beating the market consensus of 600 billion won in operating profit,” Shinhan Investment analyst So Hyun-chul said.

He expects the company to post 700 billion won in operating profit. The local brokerage maintained its “buy” rating for LG Display and set its target at 45,000 won.

LG Display supplies parts to Apple and thus, is expected to benefit from the stronger global demand for new iPhone models.

The brokerage expects sales of iPhones and iPads during the last three months of this year to increase to 85 million and 24.5 million units, up 116.4 percent and 98.9 percent from a quarter earlier, respectively.

The company is also expected to benefit from the projected increase in TV sales by LG Electronics during the fourth quarter. TV sales are expected to rise by 30 percent to 92 million units. LG Electronics holds a 37.9 percent stake in LG Display.

A weaker yen against the dollar is also a positive for LG Display.

“Payments for LCD glasses are mostly done with the yen, which helps LG Display cut costs and hedge currency risks," the analyst said.

He expects the company to also perform strongly next year.

Meanwhile, Hi Investment analyst Jung Won-seok said the supply of TVs will remain tight on the back of the stronger demand for TVs with larger-sized panels, which is reducing the production of certain TVs with mid-sized panels.

“The average selling price of panels will remain stable in the October-December period. Next year will be much better,” Jung said.

He has set a 40,000-won six-month target for the stock. The brokerage expects the panel supplier to report 526 billion won in operating profit and 375 billion won in net profit.

LG Display supplies displays for all consumer electronic devices from televisions, PC monitors, smartphones to tablets. It counts Apple, Hewlett-Packard, Nokia and Chinese outfits as clients.

Global shipments of ultra-high definition televisions, a premium product that features significantly better picture quality and commands fatter profit margins, will also remain strong, which will also benefit LG Display, analysts said.

LG Display Chief Financial Officer Kim Sang-don also said the price of the company’s panels will remain stable.

“The Chinese smartphone market is transitioning toward devices using full high-definition displays. This trend will also help us,” Kim said.