Maintain Buy but lower target price to KRW16,000, implying 40.7% upside

Overview

This report is Nomura's company research and rating change report on LG Display (034220.KS). The report maintains a Buy rating but lowers the target price to KRW16,000, on the grounds that price increases across product lines after memory-flation may reduce shipments by major customers, thereby lowering the valuation premium. Despite the company's lack of AI exposure and the negative impact of rising memory prices on IT terminal component companies, the report still believes that LG Display's valuation, competitive landscape, OLED business improvement, and financial normalization are supportive.

Core views

The core view is that short-term 2Q26F earnings may fall below market expectations due to about KRW180bn in one-off restructuring costs, but meaningful progress has already been made in the main businesses after excluding one-off factors. The report believes that growth in major customers' 2026F smartphone output, improving demand for OLED TVs and OLED monitors, lower depreciation rates, easing competition, and restructuring effects will drive earnings improvement. The company is currently trading at 0.82x 2026F P/B, which Nomura views as still attractive.

Analysis framework

The report adopts a top-down view on demand and the competitive landscape, combined with revenue, shipment, ASP, and earnings forecasts by business segment to assess fundamentals; for valuation it uses the P/B multiple method, multiplying 2027F BVPS by the target P/B and comparing it with historical upcycle P/B and ROE levels.

Methodology notes

• Valuation methodsP/B multiple method

  The target price is derived by multiplying 2027F BVPS by the target P/B.

  Nomura derives the KRW16,000 target price by multiplying 2027F BVPS of KRW15,957 by a target P/B of 0.99x; the 0.99x target P/B represents a 40% premium to the average historical upcycle P/B of 0.71x.

• Earnings forecastSegment-level operating forecast

  Forecast revenue, shipments, and operating profit by segment such as OLED TV, OLED monitor, IT panels, and Mobile.

  Through line items such as OLED TV sales, OLED monitor shipments, IT panel sales, and Mobile revenue, the report judges that the 2Q26F operating loss is mainly affected by one-off restructuring costs, while the core business has already improved.

• Rating systemNomura equity rating system

  Buy means expected to outperform the benchmark over the next 12 months.

  The report states that the target price usually reflects a 12-month share price forecast and may be affected by deviations in macro conditions, markets, and company earnings from expectations. The relevant benchmark index for LG Display is the KOSPI 200.

Asset mapping & comparison

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

• LG Display (034220.KS)

  Covered company in the report, a Korean display panel company.

  Strengths

  Valuation is at a level Nomura considers attractive; OLED TV and OLED monitor businesses are improving; competition is easing; lower depreciation rates, restructuring, and financial normalization help earnings and debt repayment capacity; 2027F ROE is expected to be significantly above the average historical upcycle level.

  Weaknesses

  Lacks AI exposure; IT end-demand is dragged down by rising memory prices; 2Q26F operating loss is expected to be weaker than market consensus; revenue in some businesses such as IT panels and Mobile is still declining YoY.

  Comparison

  The target P/B of 0.99x represents a 40% premium to the average historical upcycle P/B of 0.71x, but it is lowered from the previous target P/B of 1.17x and 64.8% premium; the report believes higher 2027F ROE can support the premium.

  Risks

  Chinese competitors re-entering the supply chain for Apple's new iPhone series; rising memory prices leading to weak IT end-sales; macro and market factors or company earnings missing expectations may hinder achievement of the target price.

Key data

• RatingBuyRating maintained.
• Target priceKRW 16,000Lowered from KRW17,000.
• Closing priceKRW 11,370As of 2026-06-26.
• Implied upside40.7%Based on target price and closing price.
• 2027F BVPSKRW 15,957Used for target price P/B valuation.
• Target P/B0.99xA 40% premium to the average historical upcycle P/B of 0.71x.
• 2027F ROE14.6%-14.7%Significantly above the average historical upcycle ROE of 8.4%.
• 2Q26F revenue forecastKRW 5.7tnUp 1.5% YoY.
• 2Q26F operating loss forecastKRW 96bnWeaker than the consensus loss of KRW55bn; 2Q25 was a loss of KRW116bn.
• One-off restructuring costabout KRW 180bnDragged on 2Q26F operating profit.
• 2Q26F OLED TV salesKRW 1.2tnUp 9.7% YoY, driven by the World Cup effect and OLED monitors.
• 2Q26F OLED monitor shipments347k unitsUp 86.0% YoY.
• 2Q26F IT panel salesKRW 2.2tnDown 7.9% YoY, but losses are expected to narrow due to restructuring effects.
• 2Q26F Mobile revenueKRW 1.2tnDown 4.5% YoY, mainly due to panel price cuts after lower depreciation rates.
• Estimated annual debt repayment capacityKRW 2.5-3.0tnThe report estimates the company can repay debt of this scale each year.

Impact & implications

The implication for investors is that the short-term earnings miss is more attributable to one-off restructuring costs rather than a broad deterioration in the core business; if restructuring, OLED monitor growth, OLED TV demand, and easing competition continue to materialize, LG Display's financial normalization may support a valuation recovery. However, the target price cut indicates that pressure remains on major customer shipments and IT end-demand, so the investment view needs to track memory prices, major customers' new product supply chains, and moves by Chinese competitors.

Risks

• Chinese competitors re-entering the supply chain for Apple's new iPhone series.
• Rising memory prices leading to weak IT end-sales.
• Major customers reducing shipments due to higher product prices.
• One-off restructuring costs in 2Q26F causing operating losses to exceed market consensus expectations.
• Macro, market, and company earnings coming in below expectations may prevent the target price from being achieved.

What to watch

• Changes in major customers' 2026F smartphone output and supply chain share for new models.
• Whether Chinese competitors enter the supply chain for Apple's new iPhone series.
• Memory price trends and their impact on IT end-demand.
• Whether 2Q26F restructuring costs are one-off, and the extent of core business improvement after excluding them.
• Whether assumptions related to OLED TV sales, OLED monitor shipments, and OLED iPad/OLED iPhone materialize.
• The contribution of lower depreciation rates, easing competition, and debt repayment progress to financial normalization.