LG Display executives
Korean display maker LG Display is struggling to find support. Due to the poor prospects in the first half of the year, the company's share price has continued to decline in the near future.
On Tuesday, LG Display's share price fell 1.72% to 25,700 won, expanding its number of consecutive days to seven days. On Tuesday, the stock fell to 25,400 won, hitting a 52-week low.
LG Display's performance has been severely declining this year. The sales of institutions and foreign investors have even made it worse. Institutional investors have been net selling LG Display shares every trading day since March. This month, its share price rose or remained unchanged for only four days, while the rest fell.
In the face of LG Display's free-falling share price, retail investors were panicked. They asked the company “What's wrong?” and complained about short-selling investors. Fortunately, although brokerage analysts believe that LG Display's future performance is weak, it said its stock price is “bottoming its bottom”.
The drop in LG Display's stock price began after the company released its fourth-quarter earnings report. During the quarter, the world’s largest LCD panel supplier’s revenue was 7.13 trillion won (approximately US$6.55 billion), an increase of 2% year-on-year; operating profit was 44.5 billion won, a decrease of 92% year-on-year.
The global panel price decline is the main reason for LG Display’s plummeting profits. The company's overall profit structure has been keeping pace with the price of LCD panels. Previously, as the demand for smart phones and TVs increased greatly, LCD panel prices have risen sharply, helping LG Display seize huge profits.
However, since the second half of last year, oversupply began to cause LCD panel prices to decline.
During the fourth quarter of last year, the average price of television LCD panels fell by 4.1% per month. This trend continued in the first quarter of this year, with an average monthly decline of 3%.
In the second half of this month, the price of 55-inch TV LCD panels remained relatively stable, falling by 0.54% from two weeks ago. However, the price of the 65-inch LCD panel fell by 4.44% over the same period, which was a larger increase than the 2.48% decline in the first two weeks of this month.
“In the overall sales of LG Display, the sales of 65-inch high-end panel accounted for a large proportion, which is likely to be a blow to it,” said Kim Hyun-soo, an analyst at Hana Financial Investment Corporation.
Kim Hyun-soo estimates that LG Display's revenue for the first quarter will decline to KRW 6 trillion, down 16% from the previous quarter; operating profit is expected to fall from the previous quarter to KRW 22 billion.
He said that LG Display's profitability has decreased significantly compared to the previous quarter due to the continuous decline in the price of LCD panels and the loss of OLED business.
Other analysts said that the uncertainty of LG Display will not be resolved until April at the earliest.
"Given that Samsung, LG and Sony's TV panel inventory is expected to return to normal levels from April, the decline in LCD panel prices is expected to slow," said Kim Dong-won, an analyst with KB Securities.