Here’s the reason:
Jefferies reiterated Buy on LGD, June 25:
We maintain BUY on LGD and our TP of KRW37,000, as we expect all three OLED divisions (large, small-/mid-sized and automotive) to generate profits concurrently in 2H21, which would a first since the OLED business launched in 2013. Specifically, we expect: (1) large OLEDs to turn profitable in 3Q21 for the first time in eight years, driven by rising ASP and better shipments; (2) small-/mid-sized OLEDs to turn profitable on a full-year basis this year on increasing orders fueled by the rollout of a new iPhone in 2H21; and (3) automotive OLEDs to remain profitable given an order backlog of KRW10tn and increasing demand from Mercedes-Benz and Cadillac.
We forecast large-OLED capacity at the Guangzhou factory to expand by 50% in 2H21 (sheets per month: 60,000?90,000). Despite the resulting increase in cost, large OLEDs should turn profitable, as: (1) LGD has based the factory’s depreciation on 90,000-sheet capacity since operations began and (2) the cost structure should improve once capacity build-up is completed. Accordingly, we forecast large-OLED panel revenue to reach KRW7tn this year and nearly KRW10tn in 2022.
We forecast 2021 shipments of large OLED panels to surge 80% YoY to 8mn sheets and small-/mid-sized OLED panels 60% YoY to 50mn sheets... |
