LG Display maintains Buy rating, target price lowered to KRW16,000; business normalization supports 40.7% upside

Overview

This report is Nomura's company research and rating change report on LG Display. The report maintains a Buy rating but lowers the target price from KRW17,000 to KRW16,000. The reduction is mainly due to price increases in some product lines by major clients after memory prices rose, which may lower LGD's shipment expectations to those clients; however, Nomura still believes the valuation is attractive and that business operations and finances are normalizing.

Core views

The core view is that LGD lacks AI exposure, and IT end-device component companies are also negatively affected by rising memory prices, but the Buy rating can still be maintained. Supporting factors include expected 2026F smartphone production growth of 7.9% YoY from major clients, attractive current valuation at 0.82x 2026F P/B, easing competitive pressure, narrowing losses after restructuring, and gradual normalization of financial conditions.

Analysis framework

The report uses 2Q26F earnings forecasts, business-segment shipment and revenue assumptions, the competitive landscape, restructuring impact, debt repayment capacity, and relative P/B valuation to determine the target price and rating. Valuation is centered on 2027F BVPS and target P/B, and is compared with historical upcycle P/B and ROE.

Methodology notes

• Valuation methodsRelative P/B valuation

  The target price is derived by multiplying 2027F BVPS of KRW15,957 by the target P/B of 0.99x.

  The target P/B of 0.99x represents a 40% premium to LGD's historical average P/B of 0.71x during upcycles. Nomura believes this premium is still justified because 2027F ROE is expected to be 14.7%, significantly above the historical average ROE of 8.4% during upcycles.

• Earnings forecastBusiness-segment operating forecast

  Revenue and operating profit are forecast through businesses such as OLED TV, OLED monitors, IT panels, and mobile panels.

  The report focuses on factors such as the World Cup effect, OLED monitor growth, lower depreciation rates, restructuring savings, and mobile panel price adjustments in assessing 2Q26F operating performance.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• LG Display (034220.KS)

  Covered company, Korean display panel stock

  Strengths

  Growth in OLED TV and OLED monitors, higher production from major clients, easing competition, restructuring-driven narrowing losses, financial normalization, and attractive valuation.

  Weaknesses

  Lack of AI exposure, IT end-markets pressured by rising memory prices, and the impact of about KRW180bn in one-off restructuring costs in 2Q26F.

  Comparison

  Currently trading at 0.82x 2026F P/B; target P/B is 0.99x, a 40% premium to the historical average of 0.71x during upcycles; 2027F ROE is expected at about 14.7%, above the historical upcycle average of 8.4%.

  Risks

  Chinese competitors re-entering the supply chain for Apple's new iPhone series, and weak IT end-demand due to rising memory prices.

• Apple (AAPL US) supply chain

  Demand source related to LGD's major clients

  Strengths

  Major clients' 2026F smartphone production is expected to grow YoY, helping support LGD panel shipments.

  Weaknesses

  Rising memory prices may push up end-product prices and suppress shipments.

  Comparison

  Nomura believes Chinese competitors are unlikely to enter major clients' new models in 2026F, but this judgment is an important assumption for achieving the target price.

  Risks

  If Chinese competitors re-enter the supply chain for the new iPhone series, LGD shipments and valuation premium may come under pressure.

Key data

• RatingBuyNomura maintains a Buy rating.
• Target priceKRW16,000Lowered from KRW17,000.
• Closing priceKRW11,370As of 2026-06-26.
• Implied upside40.7%Based on the target price and closing price.
• 2Q26F revenue forecastKRW5.7tnUp 1.5% YoY.
• 2Q26F operating profit forecast-KRW96bnWeaker than consensus at -KRW55bn, mainly due to about KRW180bn in one-off restructuring costs.
• OLED TV 2Q26F sales forecastKRW1.2tnUp 9.7% YoY, driven by the World Cup effect and OLED monitors.
• OLED monitor 2Q26F shipment forecast347k unitsUp 86.0% YoY.
• Current valuation0.82x 2026F P/BThe report believes the current valuation is attractive.
• Debt repayment capacityKRW2.5-3.0tn/yearNomura estimates LGD can repay debt of this scale annually.

Impact & implications

The investment implication of the report is that short-term 2Q26F profit may fall below market expectations due to one-off restructuring costs, but excluding those one-off costs, the core business has already shown clear progress. Over the medium term, OLED-related growth, easing competition, and financial normalization may offset pressure from IT end-demand and rising memory prices, so Nomura maintains a positive view.

Risks

• Chinese competitors re-entering the supply chain for Apple's new iPhone series.
• Rising memory prices leading to weak IT end-demand.
• About KRW180bn in one-off restructuring costs in 2Q26F causing a larger operating loss and coming in weaker than consensus expectations.
• If major clients reduce shipments due to product-line price increases, the basis for the target P/B premium may weaken.
• If company earnings fall below estimates, the target price may not be achieved.

What to watch

• Whether the actual 2Q26F operating loss is close to Nomura's forecast of -KRW96bn, and whether one-off restructuring costs are around KRW180bn.
• Whether OLED TV sales and OLED monitor shipments reach the forecasts of KRW1.2tn and 347k units.
• Whether major clients' 2026F smartphone production achieves 7.9% YoY growth.
• Whether Chinese competitors re-enter the supply chain for Apple's new iPhone series.
• The ongoing impact of rising memory prices on IT end-demand and panel shipments.
• Whether LGD can deliver on its ability to repay KRW2.5-3.0tn of debt annually.