LG Display 2Q15 results and new fab ?3

LG Display has reported a beat on the bottom line, despite missing slightly on the top.  Korean shares rose in response.

  • Net income for 2Q15 was KRW 363b vs. average estimates of KRW 353b, up 42% YoY.
  • Revenue was KRW 6708b vs. consensus of KRW 6800b, up 12% YoY.
  • Operating profit was KRW 488b vs expectations of KRW 469b, almost triple from 2Q14.

This marks the fifth straight quarter of operating profit, and affirms my opinion that the company can compete better than smaller rivals even in a declining market.  While total net display area shipments are expected to remain flat in the third quarter and panel prices continue to decline, LGD will "will implement a flexible production operation and utilization adjustment strategy" in response.

TFT-LCD panels for TVs accounted for 40% of revenue in the second quarter of 2015, mobile device panels for 28%, tablet PCs and notebook PCs 16%, and monitors 16%.  So, as expected from recent news, we'll have to wait until at least towards the end of the year to see AMOLED televisions make any appreciable impact. 

LGD also officially affirmed plans to build its E5 plant for producing flexible AMOLED displays.  That's good news for UDC, as well. 

Though LPL ADRs are down in early U.S. trading, I see nothing but good here, and think the reaction is a short-sighted response to the current LCD market.  LG Display's future is simply not as tied to that as current pricing would indicate.