LG Display shares take a dive on grim LCD outlook

Investors continue to dump shares of LG Display Co. as outlook on the world’s largest TV-screen display maker deteriorates amid a supply glut and heavy competition from government-backed Chinese rivals. 

LG Display’s shares sank to a new 52-week low of 17,750 won ($15.87) in mid-day trading on Tuesday. The last time its shares fell below 18,000 won was in October 2011. The company has lost nearly 30 percent of its market value over the past three months. 

Its shares closed Wednesday at 18,300 won, up 0.55 percent from the previous session. 

LG Display was the only local display manufacturer to fall into the red in the first quarter. It posted an operating loss of 98.3 billion won in the first three months of this year, its first loss since the first quarter of 2012. Market observers forecast its losses to have widened in the second quarter with little signs of pickup in the soft LCD prices. 

LG Display, which generates 90 percent of its sales from LCD panels, has recently taken a hit as BOE, CSOT and other Chinese rivals have pumped up supply and driven down prices on the back of strong government support. 

“LG Display needs to beef up its organic light-emitting diode (OLED) business but it is running low on cash as it fails to make money from its mainstay LCD,” Korea Investment & Securities said in a report released on Tuesday. “Conditions remain tough as its losses are expected to continue throughout the third quarter and its cash flow to face rapid deterioration.” 

Earlier this year, the company vowed to make OLED its mainstay turnout by 2020 and cement its leadership in the next-generation TV screens by investing 20 trillion won over the next few years. But it may have to adjust its OLED investment plans due to faster cooling in the display market. 

Korea Investment & Securities Co. cut the price target for LG Display from 37,000 won to 29,000 won. Other local brokerages have also lowered the target on the bleak outlook. KTB Investment & Securities Co. slashed the target price from 25,000 won to 22,000 won and Hi Investment & Securities Co. from 31,000 won to 23,000 won.