What Display Daily thinks: On the surface, the longer term implications of this raise should be positive for LG Display. The OLED business is growing, the company needs to invest in it to continue to take advantage of the opportunity, and it all seems to make sense if you buy into the expectations for OLED growth in IT and automotive next year.
On the other hand, the investment market is either tough, the risks are higher than we think, or LGD really needs the cash because the 20% discount on the shares is probably at the higher end of the range for these kinds of deals.
No matter how you look at is, LGD is struggling and is going to play catch up on OLED investments, while also trying to maintain its opportunities in IT products and automotive. Not sure how this all pans out if pricing on OLEDs goes down by the end of 2024, and competition from China puts even more pressure on LGD.
LG Display Looking to Raise Over a $1B in Public Offering
LG Display’s (LGD) is touting its decision to increase paid-in capital by 1.36 trillion won ($1.045 billion) for the purpose of strengthening OLED business. LGD plans to raise this capital through a public offering and issue approximately 142 million new shares. The proposed issue price for the new shares is includes a 20% discount. The final price of the shares will be announced by the end of February, 2024. This is considered a preemptive funding move by LGD.
A significant portion of the raised funds (30%) will be invested in developing and enhancing small and medium-sized OLED facilities, particularly those used in IT products. The company plans to prepare a mass production and supply system for IT OLED production lines using tandem technology. There’s also an emphasis on expanding the production line for automotive OLED panels and improving existing facilities to cater to new models.
Around 40% of the raised funds will be used as operational funds. This includes activities like shipping OLEDs of various sizes, expanding the customer base, and purchasing raw materials for new products. The OLED business’s contribution to LGD’s total sales is expected to grow significantly, from 40% in 2022 to over 60% in 2024.
