LG Display shares shine, reflecting metaverse hype

LG Display Co. ’s share price is continuing its upward trend, despite dampening LCD (liquid crystal display) panel prices. 

This is not in line with the pattern in the past, where LG Display's share price followed the rise and fall of LCD panel costs. For example, when LCD panel costs surged earlier this year, LG Display shares also rose; the two figures fell together in the latter half. 

The manufacturer and supplier of thin-film transistor LCD panels, OLED (organic light-emitting diode) panels and flexible displays is part of the business juggernaut LG Corp. 

Recently, however, LG Display shares have climbed despite falling prices of LCD panels. Experts say the continued uptick comes on the back of rising demand for OLED.

FROM LCD TO OLED THANKS TO METAVERSE

Industry insiders forecast hardware devices will incorporate OLED panels to fully embrace the metaverse. Adding to these expectations, local media reports say the company will provide OLED panels to Samsung Electronics Co., Ltd. and Apple Inc. in the near future. 

LG Display ended Thursday’s trading 0.66 percent higher at 23,050, compared to the lowest level in October 13 trading at 17,050 won. 

Share prices of LG Display have been sliding since the latter half of this year. From April’s high of 27,000 won level, it slid some 38 percent to 17,000 won level in early October, hit by falling prices of LCD panels. 

Analysts forecast LG Display share to have hit their high point this year and undergo correction in the next. 

LG Display’s annual operating profit consensus estimate for next year is 29.6 percent lower than this year’s at 1.68 trillion won, based on data provided by financial information provider FnGuide. 

Back in 2019, OLED panels only accounted for 20 percent of the company’s total sales. In the new year, the same products are expected to take up nearly half of LG Display’s total sales.  

Adding to the positive factors holding up the prices, the short-selling spree of LG Display shares is slowing. 

The balance of short selling was 539.4 billion won on October 27. The proportion of the balance of short selling to market capitalization was 8.15 percent to rank the highest such proportion on the Korea Stock Exchange. Since late October, however, the figure fell to 5.74 percent, thanks to a correction in its share price. 

SAMSUNG ELECTRONICS AND APPLE AS CLIENTS

Industry insiders told The Korea Economic Daily it is almost certain that LG Display will provide OLED TV panels to Samsung Electronics. The Quantum Dot OLED panels, manufactured by Samsung Display Co., Ltd., are not yet developed enough to produce OLED TVs. 

“Samsung Electronics and LG Display began working-level discussions in September and completed the development of OLED TVs using the panels made by the latter,” an industry insider with knowledge about the collaboration said. “Samsung Electronics is expected to manufacture some 250 million OLED TVs next year, of which about 200 billion OLED panels will be provided by LG Display.” 

KB Securities Co., Ltd. estimated the amount of LG Display’s LCD and OLED supply to Samsung Electronics to be approximately three trillion won. 

US tech giant Apple is expected to incorporate LG Display’s OLED panels in its XR headsets and Apple Cars, to be released in 2025.

Due to the surging demand for OLED panels, the global supply shortage is forecast to worsen. Seoul-based Ubi Research expects the demand for large-size OLED panels to surpass supply by 2 million in 2024. 

In terms of valuation, a majority of analysts see the company is still undervalued. LG Display’s leading stock price-earnings ratio stands at 7.8, lower than last January’s 10.2, according to FnGuide.

KB Securities Co. Ltd. revised LG Display’s target share price to 12 percent higher from the previous target of 25,000 won per stock to 28,000 won. Three out of five securities that provided analysis on LG Display this month revised their target prices upward.

Analysts that are bullish on the panel maker see the current target not incorporating possible good news regarding Samsung Electronics and Apple. Market sentiment is widely forecast to stay positive, especially after the collaborations with the two tech giants become official.

Write to Hyung-gyo Seo at seogyo@hankyung.com
Jee Abbey Lee edited this article.