LG Display Corporation - Investment Research EDITED

8/2/2019 LG Display Corporation - Investment Research EDITED

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APPENDIX

2009 2010 2011 2012F 2013F 2014F 2015F

Sales 20,037,702.00 25,511,535.00 25,121,347.70 31,448,135.55 31,407,104.53 32,364,699.55 35,139,155

-TV 10,965,000.00 14,079,000.00 13,928,745.12 17,926,294.97 21,061,098.35 19,271,146.30 22,213,915

-NBPC 3,568,000.00 4,424,000.00 4,233,566.12 5,189,142.47 4,659,750.15 5,438,982.22 5,546,786

-Desktop monitors 4,640,000.00 5,390,000.00 5,512,737.03 6,772,397.44 4,186,044.70 6,130,904.22 5,709,197

-Other apps 865,000.00 1,619,000.00 1,342,227.56 1,442,810.74 1,378,199.47 1,400,182.95 1,528,910Cash Operating Costs (16,185,515.00) (21,274,975.00) (23,676,870.21) (29,639,867.75) (24,183,470.49) (24,920,818.65) (26,354,366

EBITDA 3,852,187.00 4,236,560.00 1,444,477.49 1,808,267.79 7,223,634.04 7,443,880.90 8,784,788

Depreciation and Amortization (2,842,000.00) (2,926,000.00) (2,661,713.75) (2,721,208.56) (2,885,379.41) (3,036,231.25) (3,249,795

EBIT 1,010,187.00 1,310,560.00 (1,217,236.25) (912,940.77) 4,338,254.64 4,407,649.65 5,534,99

Interest Income 333,000.00 241,000.00 577,791.00 408,825.76 455,403.02 491,943.43 576,282.

Interest Expense (344,000.00) (288,000.00) (263,774.15) (295,612.47) (320,352.47) (372,194.04) (456,809.

Foreign exchange Net 20,000.00 18,000.00 81,644.38 36,165.36 36,118.17 37,543.05 40,410.0

Others, net (6,000.00) (16,000.00) (45,218.43) 37,737.76 38,316.67 40,132.23 43,923.9

Total 3,000.00 (45,000.00) 187,154.04 114,785.69 137,249.05 122,338.56 122,987.0

EBT 1,013,187.00 1,265,560.00 (1,030,082.21) (798,155.07) 4,475,503.68 4,529,988.21 5,657,980

Income Tax Benefit 104,818.00 (106,335.00) 314,016.85 314,481.36 345,478.15 388,376.39 456,809.

NOPLAT 1,118,005.00 1,159,225.00 (716,065.37) (483,673.72) 4,820,981.83 4,918,364.61 6,114,789

Dividends - - - - 178,900.00 178,900.00 178,900.0

Outstanding Shares(000,000 omitted) 357.8157 357.8157 357.8157 357.8157 357.8157 347.0812 329.727

Average Shares 357.8157 357.8157 357.8157 357.8157 352.4485 338.4042 329.727

DPS - - - - 500.0 515.4 542.6

EPS 3,124.5275 3,239.7265 (2,001.2128) (1,351.7398) 13,473.3659 14,170.6442 18,544.99

Diluted EPS 3,124.5275 3,239.7265 (2,001.2128) (1,351.7398) 13,678.5440 14,533.9941 18,544.99

(000,000 omitted)

For the years 2009 to 2015

Forecasted Income Statement

LG Display Corporation



5% 44,277 61,812 47,461 179,464

10% 46,386 64,755 49,721 188,010

-10% 42,282 57,669 22,375 159,644

-5% 44,631 60,872 23,618 168,514

BASE 46,980 64,076 24,861 177,383

5% 49,329 67,280 26,104 186,252 10% 51,678 70,484 27,347 195,121

-10% 44,129 60,858 34,681 168,563

-5% 46,580 64,239 36,607 177,928

BASE 49,032 67,620 38,534 187,293

5% 51,484 71,001 40,461 196,657

10% 53,935 74,382 42,387 206,022

-10% 47,526 65,189 31,380 180,514

-5% 50,166 68,811 33,124 190,543 BASE 52,807 72,433 34,867 200,571

5% 55,447 76,054 36,611 210,600

10% 58,087 79,676 38,354 220,629

FORECASTING

Line items 2011 2012 2013 2014

Gross Profit % 5.75% 13.75% 23.00% 25.00%

COGS %/EBITDA 87.00% 90.00% 85.00% 89.00%

Finance Income 0.0230 0.0130 0.0145 0.0152

Finance Costs -0.0105 -0.0094 -0.0102 -0.0115

Foreign exchange Net 0.0033 0.0013 0.0012 0.0012

Others, net -0.0018 0.0012 0.0012 0.0012

Income Tax Benefit 0.0125 0.0100 0.0110 0.0120

Inflation Rate 0.0042 0.0038 0.0039 0.0038

CAPEX Growth 1.62 1.65 1.68 1.71

Dep'n Charge Growth 1.02 1.05 1.08 1.11

Intangible Growth 4.15 5.25 6.35 7

Acc. Amort'zn Growth 6.71 7.57 8.29 7.34

Addt'l Intangibles 1.12 1.15 1.17 1.21Amortization Charge 1.115 1.12 1.135 1.142

Cash/Sales Growth 0.0695 0.1 0.15 0.17

ST Instruments/sales 0.07 0.0722 0.1006 0.17

Collection period 60 60 30 30

Inventory TO days 30 45 15 15

Other CA/sales 0.02 0.035 0.07815 0.09239

Other NCA/sales 0.0812 0.0911 0.104 0.13

Payable days 60 75 45 45

2013

2014

2015



Other CL/sales 0.25 0.3 0.2598 0.38

ST debt/sales 0.1 0.22 0.27 0.25

other NCL/Assets 0.12 0.09 0.0975 0.065

LT debt growth 1.08 1.12 1.12 1.1

growth in minorities 1.01 0.9999999 1 1.03

CS&APIC growth 1.03 1.06 1.02021 1.095

other income growth 1.09096 1.05721 1.02911 1.0211O/S shares growth 1 1 1 0.97

Interest Expense Paid 0.5 0.65 0.69 0.7

debt payment 0.25 0.65 0.64 0.75

MV of debt 0.8 0.68 0.72 0.77

MV of equity 1.15 1.2 1.23 1.25

Current Stock price ₩27,150.00



TV 35,316 51,184 41,088 49,329

NBPC 50,632 70,124 57,359 64,755

Desktop monitors 43,384 49,336 44,042 49,721

Other apps 161,804 188,798 166,536 179,464

Sales Price

TV 310.48 275.07

NBPC 70.47 63.09

Desktop monitors 106.95 109.25

Other apps 5.35 8.58

Sales Volume



0.8

0.9

1.11.2



2015

35.00%

91.00%

0.0164

-0.0130

0.0012

0.0013

0.0130

0.0040

1.73

1.12

8.25

8.34

1.251.154

0.25

0.1549

30

10

0.04

0.127

60



0.3

0.2

0.0675

1.14

1.01501

1.0424

1.05080.95

0.71

0.65

0.8

1.3



51,678 53,935 58,087

70,484 74,382 79,676

27,347 40,461 38,354

195,121 196,657 220,629



2015F

0.88

0.780.65

12.67

6.48

27.47

28.82

56.35

13.29

-14.24

1.06

0.68

0.25

0.16

0.17

0.12

0.26

0.14

1.08

1.022.22

0.24

0.49

0.33

12.12

12.12

0.03

0.97

0.25



2009 2010 2011F 2012F 2013F 2014F

ASSETS

Current assets:

Cash and cash equivalents ₩817,982 ₩1,631,009 ₩1,745,934 ₩3,144,814 ₩4,711,066 ₩5,501,999

Short term financial instruments 2,500,000 1,503,000 1,758,494 2,270,555 3,159,555 5,501,999Trade accounts and notes receivable 2,950,245 3,000,661 4,129,537 5,169,557 2,581,406 2,660,112

Inventories 1,667,780 2,215,217 1,946,044 3,654,230 993,841 1,024,143

Other current assets 290,135 490,546 502,427 1,100,685 2,454,465 2,990,175

Total current assets 8,226,142 8,840,433 10,082,436 15,339,840 13,900,333 17,678,428

Investments and other non-current assets 1,528,446 1,661,923 2,039,853 2,864,925 3,266,339 4,207,411

Property, plant and equipment, net 9,596,497 12,815,401 16,073,641 19,384,441 22,641,575 25,859,60

Intangible assets, net 352,393 539,901 743,815 957,046 1,174,680 1,404,685

Total noncurrent assets 11,477,336 15,017,225 18,857,309 23,206,412 27,082,594 31,471,697

Total Assets ₩19,703,478 ₩23,857,658 ₩28,939,745 ₩38,546,253 ₩40,982,926 ₩49,150,125

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term debt ₩2,003,570 ₩2,100,023 ₩6,280,337 ₩9,434,441 ₩8,159,566 ₩12,298,586

Trade accounts and notes payable 2,031,422 2,961,995 3,892,088 6,090,384 2,981,524 3,072,430Other payables and accrued liabilities 2,460,079 3,819,811 2,512,135 6,918,590 8,479,918 8,091,175

Total current liabilities 6,495,071 8,881,829 12,684,560 22,443,414 19,621,008 23,462,190

Long-term debt 2,076,160 2,542,900 2,242,253 2,325,299 2,325,299 2,283,776

Other non-current liabilities 1,092,498 1,371,962 3,472,769 3,469,163 3,995,835 3,194,758

Total liabilities 9,663,729 12,796,691 18,399,582 28,237,876 25,942,142 28,940,725

Common Stock and additional paid-in capital 4,040,191 4,040,192 4,161,398 4,411,082 4,500,230 4,927,75

Retained Earnings 6,050,562 7,031,163 6,315,098 5,831,424 10,473,498 15,212,954

Other comprehensive income/loss (51,003) (35,298) 38,509 40,712 41,897 42,78

Controlling Interest equity 10,039,750 11,036,057 10,515,004 10,283,217 15,015,624 20,183,487

Non-controlling Interest equity (1) 24,910 25,159 25,159 25,159 25,914

Total shareholders' equity 10,039,749 11,060,967 10,540,163 10,308,376 15,040,783 20,209,401

Total liabilities and shareholders' equity ₩19,703,478 ₩23,857,658 ₩28,939,745 ₩38,546,253 ₩40,982,926 ₩49,150,125


Balance Sheet

For the years 2009 to 2015

(000,000 omitted)



2009 2010 2011 2012F 2013F 201

1,118,005.00 1,159,225.00 (716,065.37) (483,673.72) 4,820,981.83 4,918

Adjustments for: 2,934,037.00 2,926,964.00 3,007,446.26 3,068,491.44 3,237,313.40 3,390

Depreciation 2,779,000.00 2,757,000.00 2,834,580.00 2,894,850.00 3,061,346.40 3,213

Amortization of intangible assets 155,037.00 169,964.00 172,866.26 173,641.44 175,967.00 177

Change in Working Capital (1,032,856.00) (1,032,856.00) 4,377,298.70 (2,746,225.68) (1,458,228.27) 3,284

Change in Current Assets (Excluding Cash) (66,891.00) (198,736.00) 1,127,078.03 3,858,524.90 (3,005,759.89) 2,987 Change in Current Liabilities (Excluding Short Term debt) (148,795.00) (2,290,305.00) 377,582.98 (6,604,750.58) 1,547,531.62 297

Cash flow from Operations (CFO) 5,084,898.00 5,119,045.00 (2,085,917.81) 5,331,043.40 9,516,523.50 11,593

Acquisition of property, plant and equipment (3,761,000.00) (5,975,904.00) (6,092,820.00) (6,205,650.00) (6,318,480.00) (6,431

Acquisition of intangible assets (237,319.00) (187,508.00) (984,873.85) (1,245,924.75) (1,506,975.65) (1,661

Cash flow from Investing (3,998,319.00) (6,163,412.00) (7,077,693.85) (7,451,574.75) (7,825,455.65) (8,092

Increase in non-controlling interest - 24,911.00 249.10 (0.00) -

Payment of cash dividend - - - - 178,900.00 178

Notes payable payment (1,946,044.13) (3,958,749.46) (2,057,251.39) (2,150

Cash flow from Financing - 24,911.00 (1,945,795.03) (3,958,749.46) (1,878,351.39) (1,971

1,086,579.00 (1,019,456.00) (11,109,406.69) (6,079,280.81) (187,283.55) 1,530

Net Income for the year (Won)


Cash flow Statement

NET CASHFLOW

(000,000 omitted)



333,000.00 241,000.00 577,791.00 408,825.76 455,403.02 491

(344,000.00) (288,000.00) (263,774.15) (295,612.47) (320,352.47) (372

1,528,446.00 1,661,923.00 2,039,853.43 2,864,925.15 3,266,338.87 4,207

(6,000.00) (16,000.00) (45,218.43) 37,737.76 38,316.67 40



2015F

6,114,789.66

3,607,620.67

3,428,707.97

178,912.70

(1,914,071.59)

(1,717,620.43) (196,451.15)

11,636,481.92

(6,506,530.00)

(1,957,881.75)

(8,464,411.75)

388.97

178,900.00

(3,075,879.50)

(2,896,590.53)

275,479.63



576,282.15

(456,809.02)

4,462,672.74

43,923.94



Divs. g Ke PV Factor Total

2012 0 5.25% 1.00 0

2013 499.9781 5.25% 0.90 451.343029

2014 515.4413 1.030928 5.25% 0.86 442.092249

2015 542.5698 1.052632 5.25% 0.81 442.147517

TV 33000 5.25% 0.81 26892.1498

PV0

₩28,227.73



2012 2013 2014 2015

Cash flow from operations 5,331,043.40 9,516,523.50 11,593,699.76 11,636,481.92 Market Risk Premium

Interest Expense after tax 1,336,008.96 1,444,010.80 1,451,858.69 1,485,866.19 5 year Government Bill

Investment in Fixed Capital (6,205,650.00) (6,318,480.00) (6,431,310.00) (6,506,530.00) Levered Beta (company)

Free Cashflow to the Firm (FCFF) 461,402.36 4,642,054.30 6,614,248.45 6,615,818.10 Market Return

Cost of Capital 0.0696 0.0696 0.0696 0.0696 Cost of Equity

PV factor 1.00 0.93 0.87 0.82

PV of Cash flows 461,402.36 4,339,793.67 5,780,937.00 5,405,802.25 MV of Debt

Terminal Value t16 2,770,616.5216 MV of Equity

Reinvestment rate 31% Total MV

estimated growth t16 6% D/E

estimated cost of capital t16 7.20% YTM long term bond - 5yr

estimated EBIT growth t16 1.14% after tax cost of debt @ 10%

estimated marginal tax t16 0.30 cost of equity

PV of Terminal Value 2,263,878.00 WACC

Value of the Firm 18,251,813.29

Less: MV of debt (7,996,623.11)

Equity Value 10,255,190.18

O/S shares 357.82

Stock Price ₩28,660.54

Current Stock Price ₩27,150.00

(∆)Change in Stock Price 5.56%

Free Cash flow to the Firm 461,402.36 4,642,054.30 6,614,248.45 6,615,818.10

Net Debt 4,115,908.95 3,774,551.38 3,645,590.46 4,517,999.16

Capital Expenditures (6,205,650.00) (6,318,480.00) (6,431,310.00) (6,506,530.00)

Free Cash flow to the Equity (1,628,338.68) 2,098,125.68 3,828,528.91 4,627,287.27

Required Return (Ke) 0.0525 0.0525 0.0525 0.0525

PV factor 1 0.95 0.90 0.86

PV of cashflows (1,628,338.68) 1,993,468.58 3,456,111.31 3,968,808.54

Terminal Value @ Terminal Year 2,770,616.5216

PV of Terminal Value 2,376,348.36

Value of the Equity 10,166,398.11

O/S shares 357.82

Stock Price ₩28,412.39

Current Stock Price ₩27,150.00

(∆)Change in Stock Price 4.65%

(000,000

Free Cashflow to the Firm Valuation

Free Cash flow to the Equity Valuation

000,000 omitted Cost o



P/E P/BV P/S (000,000 omitted)

2012F 2012F 2012F Enterprise Value 18,329,622.56

AU Optronics 10.74 - 0.32 Market Capitalization 9,714,696.26

Samsung Electronics 23.42 1.78 1.05 Debt 11,759,739.86

Hynix 4.25 2.17 1.64 Cash&Cash Equivalents 3,144,813.55

Panasonic 19.60 0.70 0.20

Sony Corporation 25.40 0.73 0.25 U Under Valued

Sharp 9.26 0.78 0.23 O Over Valued

Average (Peer) 15.44 1.23 0.62 FV Fairly Valued

Median 15.17 0.78 0.29Industry 14.60 - 0.80

LG Display -21.20 1.00 0.33

Result: O U U

Current Stock Price 27150 27150 27150

LG Display Value/Share 20876.49 35406.28 54051.86

EV/Sales EV/EBITDA EBITDA % Forward P/E Trailing P/E

2012F 2012F 2012F 2012F 2012F

AU Optronics 0.70 8.84 7.94% 10.74 10.60

Samsung Electronics 0.98 5.64 17.33% 23.42 22.50

Hynix Inc 0.88 6.15 34.33% 4.25 3.59

Panasonic 0.32 5.87 5.40% 19.60 18.94

Sony 0.20 4.42 4.59% 25.40 23.15

Sharp 0.55 4.79 11.38% 9.26 8.10

Average (Peer) 0.59 5.37 14.61% 15.44 14.48

Median 0.63 5.76 0.10 15.17 14.77

LG Display 0.58 10.14 5.75% -21.20 -13.57

Result: U FV O U

Current Stock Price 27150 27150 27150 27150

LG Display Value/Share 27,426.64 27158.202 20876.4945 28977.56161



Credit Risk Analysis

z = 1.2(Working Capital/Total Assets) + 1.4(R/E/Total assets) + 3.3(EBIT/TA) + 0.6(MV E/BV L) + 1.0(Sales/TA)

2012F 2013F 2014F 2015F

z-score 1.357948 2.362852 2.284616 3.06133

1st part -0.22114 -0.1675 -0.14121 -0.05876

2nd part 0.211797 0.357781 0.433328 0.5453743rd part -0.07816 0.349322 0.295935 0.336443

4th part 0.629599 1.056907 1.038077 1.591019

5th part 0.815855 0.766346 0.658487 0.647249

note: a score greater than 2.7 means the company has a low chance of default

a score less than 1.8 implies a high chance of default

a score between these digits could mean that the firm is undertemined whether it is high or low risk

conclusion: the firm is not liquid during the year 2012 and this can be proven by the liquidity ratios

LG Display Corporation - Investment Research EDITED

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