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LG Display 3Q16 report +3
I've just finished listening to the LG Display's conference call,
and it mainly confirms what I'd already foreseen. Across the
business, large screens were more profitable and that trend is
expected to continue.
CapEx remains a concern and it will continue to expand as LG plays catchup on flexible AMOLEDs. Specifically, management said that, AMOLED expenditures represented half of CapEx in 2016, and that they expected that to expand to 70% in 2017 as the company continues the tricky process of balancing new line construction against conversion of old lines. On the latter point, there was an interesting bit that I had not heard before: one of the existing lines being converted is taking away 50K of LCD capacity in order to enable 26K AMOLED production. It wasn't specified whether this was area or unit volume, but either way, it highlights what a huge undertaking LGD is in the midst of.
To that end, there was also quite a bit of questioning concerning Chinese competition. Management has already shifted out of smaller size panels, and believes the Chinese will be mostly stuck at 32" for the next year or two, then increasing to 50" or larger. By that point LGD should be largely shifted over to AMOLEDs, and management believes the Chinese still have a long way to go before achieving quality parity there.
So far, LGD has executed well on staying ahead of the market. As long as it can continue to do so, LPL investors should do well, but currencies and market demand will need to be monitored.
LG Display has reported financial results* for the third quarter:
Although not quantified in the presentation, guidance from the CFO also sounds good:
- earnings of 23 cents, beats by 2 cents
- on revenue of $5.9b, beats by $200M
profits in the fourth quarter are anticipated to further improve significantly.Due to the onerous multi-lingual format of LGD earnings calls, a full analysis of the call will not be done until after the Covanta earnings call this morning.
* - calculations above were done using and exchange rate of 0.0008805 USD to KRW