LG Display Shares Jump as Industry Seen Bottoming

Shares in flat screen maker LG Display jumped almost 9 percent Monday on growing hopes that the downturn in the liquid crystal display (LCD) industry has passed its worst.

Lee Jin-man / AP

Chief executive of the world's No. 2 LCD maker, Kwon Young-soo, said in remarks after results on Friday that the LCD market has hit a bottom and TV panel prices could recover in coming months, after LG Display reported a record quarterly net loss for October-December.

Although LCD makers are set to incur further losses in the first quarter on sluggish demand and weak screen prices, the market environment appears better than initially thought, analysts said.

"There are hopes for a short-term recovery as Chinese demand is growing for small-size LCD screens," said Jeff Kim, an analyst at Hyundai Securities. "It looks like LG's first-quarter losses will be smaller than the market had expected."

Kwon said demand is solid for low-priced, small-size LCD sets that replace cathode ray tube models. LG Display's key clients, including LG Electronics and Chinese TV makers, are seen benefiting from the recent expansion in tax refund for TVs in China, Kwon said.

LG Display is also expected to widen gaps with its smaller Taiwanese rivals, such as AU Optronics and Chi Mei Optoelectronics, which have cut output drastically and could face production issues, Kwon said.

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However, analysts remained cautious, saying a fuller recovery in the sector could take time.

"The recent signs of recovery are a result of production cuts ... we need to see actual demand growth in the second half but uncertainties still linger on the global downturn," Hyundai's Kim said.

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