Global display:LCD panel price update

We have flagged since March the potential for a rebound in LCD panelprices (Panel prices poised for rebound?). The latest bi-weekly panel prices(Figs. 1, 6, 7, 8) clearly indicate that panel prices have bottomed. Inventorylevel (Fig 3) looks relatively healthy as well. However, we remainconservative on the magnitude and sustainability of a recovery in panel ASPas sell-through demand remains uncertain. Also, we think one-off factors(supply-side) such as (1) Samsung Display’s 0.4mm glass issue and (2) theFeb 2016 earthquake that damaged Innolux’s fabs in southern Taiwan mayhave temporarily contributed to the overall supply/demand balance.

    Strong recovery in TV demand is critical for a sustainable turnaround inpanel ASP, in our view. We are seeing healthy restocking demand (sell-in)from March (Fig 2) as both TV set/panel makers have exercised tightinventory management. However, weaker-than-expected sell-throughdemand (dependent largely on macro conditions and FX movements) maycap the rebound.

    We think pure LCD plays may see positive share price momentum on theback of LCD ASP bottoming out. But we maintain our bearish stance on LGDisplay (see our recent downgrade report) on the back of (1) expectedmarket share loss in Apple business, and (2) prolonged OLED TV losses.