LG Electronics: OLED TVs Become Mainstream
Among overall TV sales, OLED TVs are expected to claim double-digit market share this year (10%)—for the first time in eight years since their initial introduction in 2013.
In the segment for TVs priced USD2,000 or over, OLED TVs are expected to exceed the 40% mark (27.8% in 2019 → 33.5% in 2020 → 40.3% in 2021E).
The price gap between a 55” OLED TV and an LCD TV of the same size has narrowed sharply from 5x in 2020 to just 2x as of April this year, boosting demand for OLED TVs.
As such, LGD should be able to raise OLED TV panel prices in 2Q21, and the company’s OLED TV panel OP turn to profit next year (loss of KRW67.3bn in 2021E → profit of KRW458.5bn in 2022E).
(1) LGE’s position in the TV market should improve on growing OLED TV shipments at the HE (TV) division (2021E forecast 4.11mn units, doubling YoY). In particular, LGE should gain market share as global competitors are burdened by rising LCD panel prices and panel shortages.
(2) In 2H21, the VS (automotive components) division should turn profitable given a growing weighting of EV components and lamps, as well as normalizing order intake (backlog of KRW60tn).
We forecast 2021E OP will surge 42% YoY to KRW4.6tn on brisk earnings at the HE and H&A divisions and the shutdown of the MC business. NP is forecast to grow 51% YoY to KRW3.0tn backed by an earnings turnaround at LG Display. Meanwhile, we believe Samsung Electronics’ upcoming entry into the OLED TV market in 2022 should bolster the overall size of the global TV market and positively impact LGE’s OLED TV business.
North American TV market share to surge on OLED TVs.
We estimate that LGE’s share of the North American TV market has climbed from 16% in 2020 to over 20% in 1Q21 while global rivals have lost substantial market share. LGE’s OLED TV business has benefited from stable OLED TV panel supplies from LG Display as well as the shrinking price gap between LCD and OLED panels (from five times to only two times), while competitors have faced both LCD shortages and higher prices. Going forward, LGE’s OLED TV lineup should grow from four sizes (55”, 65”, 77”, 88”) to six, given the expanding demand for 41” and 48” gaming purpose models.
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