OLED to Become Standard for TVs
The author is an analyst of KB Securities. He can be reached at jeff.kim@kbfg.com. -- Ed.
OLED TV panel shortage expected in 2022
We maintain BUY and TP of KRW25,000 (0.6x 2022E P/B) on LGD. We remain positive about the company because we believe Samsung Electronics’ entry into the OLED TV market in 1H22 will reshape the TV ecosystem around OLED panels, disrupting the hegemony of Chinese LCD panel makers. Next year, the OLED TV panel market will become a seller’s market centered on LGD and its monopoly. With LGD as the sole supplier of OLED TV panels, the company’s bargaining power will grow, allowing it to begin recovering investments channeled into OLED TV panels since 2013.
OLED to become standard for TVs once Samsung Electronics enters market next year
We see OLED TVs becoming the standard for premium TVs once Samsung Electronics debuts in the market. In the global premium TV segment, OLED TV demand is growing at a fast clip (2021E: +30% YoY), in sharp contrast to shrinking LCD TV demand. We expect LGD’s OLED TV panel unit to post 4Q21 OP of KRW144.9bn (6.8% OPM), which should be enough to mitigate any earnings contractions caused by falling LCD TV panel prices.
LGD to benefit from growing metaverse market, with Apple employing OLED panels for its XR device
In 2H22, Apple’s push into the metaverse should take the form of an XR, or extended reality (AR + VR), device, which will likely be equipped with two 8K OLED displays. Companies like Microsoft, Facebook (Meta), Google and Sony are also expected to roll out various XR devices next year, all of which are likely to employ OLED displays to generate 3D images. Furthermore, we see Apple continuing to tap into established vendors (e.g., LG Display, LG Innotek) for iPhone components.