Korean Stock~

1. Executive Summary

• Business Model: LG Display has successfully pivoted its business structure, scaling down low-profitability LCD operations to focus on high-value High-end OLED (Mobile, IT, TV, and Automotive). The primary engine of current profitability is the supply of premium OLED panels to major global clients, including Apple.
• Recent Highlights:
  1. First Annual Profit in 4 Years: Recorded an operating profit of KRW 517 billion in 2025, finally breaking a long streak of losses.
  2. Improved Financial Structure: Secured significant liquidity by completing the sale of its Guangzhou LCD plant for KRW 2.2466 trillion.
  3. Technology Leadership: The company is strengthening its grip on the premium market by branding its “Tandem OLED” technology, which stacks OLED layers to maximize lifespan and brightness.
• Industry Trends: While the commodity display market has shifted toward Chinese players (BOE, CSOT, etc.), LG Display maintains a decisive technological lead in the Premium IT and Automotive OLED sectors. Growth momentum remains strong as “OLED penetration” continues to rise across downstream industries.

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2. Fundamental Analysis

Key Financial Data (Consolidated)

Category	2024 (Actual)	2025 (Actual)	YoY Change
Revenue	KRW 26.6153 Trillion	KRW 25.8101 Trillion	-3.0%
Operating Profit	KRW -560.6 Billion	KRW 517.0 Billion	Turnaround
Net Income	Deficit	Expected Surplus	Turnaround

• Performance Analysis: Although total revenue slightly decreased (-3%) due to the downsizing of the low-margin LCD business, the quality of earnings has fundamentally improved. Notably, as of Q4 2025, OLED products accounted for 65% of total revenue, driving margin expansion.
• Key Financial Ratios:
  • PBR (Price-to-Book Ratio): Currently around 1.1x. This represents a normalization compared to the sub-0.5x levels seen during the deficit years.
  • Debt-to-Equity Ratio: Successfully reduced the debt ratio from 307% (end of 2024) to 243%. While still relatively high, the improvement in cash flow is highly encouraging.
• Valuation: Considering the valuations of global peer groups (Samsung Display, BOE, etc.), the current share price (mid-14,000 KRW range) is still viewed as undervalued, given that 2025 marks the inaugural year of a structural turnaround.

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3. Supply & Demand Analysis

• Primary Buyers: Foreign and institutional investors are the dominant buyers. Foreign ownership has climbed to approximately 29.12%.
• Institutional Deep Dive: Over the past year, major players—including the National Pension Service (NPS) and domestic/international asset managers focused on long-term value—aggressively accumulated shares at the bottom (KRW 7,000–9,000 range). They are betting on the “structural turnaround” narrative.
• Retail Sentiment: In contrast, retail investors, many of whom were “trapped” during the long downturn, have been offloading shares as the price rose above KRW 14,000. This “break-even psychology” has led to active churn (hand-off) between retail and institutional investors.
• Short Selling Risk: With the return to profitability and the cash injection from the LCD plant sale, the risk of massive short-selling attacks is significantly low. Instead, price corrections are likely to be met with short covering, providing a solid floor for the stock price.

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4. Risk Assessment

• Internal Risk (Financial Health): The most pressing concern is the lingering financial burden. To maintain its OLED edge, roughly KRW 2 trillion in CapEx (Capital Expenditure) is planned for 2026. Given the 243% debt ratio, any mismanagement of cash flow or interest expenses could reignite concerns over financial stability.
• External Risk (Competition & Macro): Chinese panel makers are pouring capital into 8.6th Generation IT OLED lines. This poses a threat of a “second chicken game” (price wars) in the premium market in 2-3 years. Additionally, delayed global interest rate cuts or currency volatility could dampen demand in the downstream IT sector.

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5. Investment Verdict

SWOT Summary

• Strengths (S): Unrivaled technological leadership in premium OLED (e.g., Tandem OLED).
• Weaknesses (W): Free Cash Flow (FCF) pressure due to heavy CapEx and a high debt ratio.
• Opportunities (O): Explosive demand for IT and automotive displays driven by the “On-Device AI” era.
• Threats (T): Massive capital power and rapid catch-up from Chinese competitors.

Investment Rating: BUY

• Target Prices:
  • Short-term Target: KRW 16,800 (Upper end of analyst consensus)
  • Mid-to-Long-term Target: KRW 21,000 (Anticipated valuation re-rating as OLED penetration expands)
• Stop-loss: KRW 12,500 (To be triggered if major long-term support levels are breached or fundamentals deteriorate)

Final Comment: Now that four years of grueling restructuring have finally been validated by the numbers, any short-term price corrections should be viewed as an attractive buying opportunity to increase your position.