LG Display - Q2 2023

Transcript

Brian Huah (Head of Investor Relations)

Good morning, this is Brian Huah, in charge of LG Display's IR. On behalf of the company, let me thank all the participants at this conference call. Today, I'm joined by the CFO, Sung Hyun Kim, Ki Hyun Kim, CSO, Seung Min Lim, Senior Vice President of Corporate Planning, Gi Hwan Son, Vice President of Auto Marketing, Ki Young Lee, in charge of Business Intelligence, Won Jae Lee, in charge of Large Display Marketing, and Chang Won Kim, in charge of Medium Display Marketing.

The conference call will be conducted in both Korean and English. Please refer to the provisional earnings released today, or the IR events section in the company's website for more details on the financial results of Q2 2023. Before we begin the presentation, please take a moment to read the disclaimer. Please note that today's results are based on consolidated IFRS standards prepared for your benefit and have not yet been audited by an outside auditor.

I will start with Q2 business results. In the midst of intense inventory correction continuing in the downstream industries since last year, especially in TV and IT, panel inventory in the channels has been falling. With improving inventory soundness across the industry ecosystem leading to gradual recovery in panel demand, shipment of medium and large panels grew in Q2, led by OLED TV and IT.

Revenue in Q2 was KRW 4.739 trillion, up 7% QOQ. There was operating loss of KRW 881 billion, reduced from the previous quarter, following growth in shipment, improved operational efficiency, and strong cost savings like cost innovation. LCD TV panel price keeps trending upward, its impact on the company's Q2 results was limited, with the company continuing with downsizing of LCD TV business as planned. Next, on area shipment and ASP per square meter. Q2 area shipment was up 11% QOQ to 4.72 million square meters on the back of increased shipment of medium and large size panels. ASP per square meter was $803, down 6% QOQ, in line with the previous quarter's guidance from the seasonal decline in mobile shipment.

In terms of revenue breakdown by each product segment, TV panel's revenue mix was 24%, owing to the QOQ growth in OLED TV panel shipment.

IT accounted for 42%, up 4 percentage points QOQ, while mobile and others took up 23%, down by 9 percentage points, following the seasonal decline in mobile panel shipment. Auto business is showing steady growth, with its revenue mix remaining unchanged QOQ at 11%. OLED revenue mix was lower QOQ, due to a seasonal decline from mobile OLEDs, falling 3 percentage points to 42%.

다음은 재무 현황 및 주요 지표입니다. 현금성 자산은 삼조 팔천오백삼십억원, 재고 금액은 재고 최소화 노력으로 이조 육천팔백이십억원을 기록하였습니다. 주요 재무 비율은 유동성 강화를 위한 전략적 재무 활동과 단기 순손실로 인해 전분기 대비 상승하였으며, 부채 비율은 이백구십삼퍼센트, 순차익금 비율은 백사십삼퍼센트입니다.

Speaker 11

Next is on the financial position and key metrics. Company's cash and cash equivalent was KRW 3.853 trillion. Inventory value was KRW 2.682 trillion, resulting from the company's effort to minimize inventory. Key financial ratios were up QOQ, resulting from the strategic financing activities to strengthen liquidity as well as net loss in the quarter. Debt to equity ratio was 293%, and net debt to equity ratio 143%. Cash flow in Q2 was KRW 3.853 trillion, almost flat from the previous quarter, with cash inflow from financial activities and cash outflow through investment balancing out each other.

Brian Huah (Head of Investor Relations)

다음은 삼분기 guidance입니다. 산업 생태계 전반에서 재고가 점진적으로 소진되고 있어 삼분기에는 이분기에 이어 중대형 제품군의 출하 확대를 기대하고 있습니다. 이에 따라 삼분기 출하 면적은 전분기 대비 한 자릿수 중반 % 수준의 증가가 예상됩니다. 면적당 판가는 계절성에 따른 모바일용 패널 출하 확대로 전분기 대비 한 자릿수 후반 % 증가할 것으로 전망하고 있습니다. 감사합니다.

Speaker 11

Next on Q3 guidance. With inventory level moving down across the industrial ecosystem, shipment of medium and large size products is expected to grow again in Q3, following Q2. Area shipment is thus expected to grow by a mid-single digit in Q3. ASP per square meter is expected to increase by high single digit QOQ, thanks to seasonal growth in mobile panel shipments. Thank you for your attention.

Brian Huah (Head of Investor Relations)

Next, our company's CFO Sung Hyun Kim, Senior Managing Director's highlights will follow.

Sung Hyun Kim (CFO)

예, 안녕하십니까? CFO 김성현입니다. 지난 상반기를 돌아보면, 거시경제 불확실성 지속에 따른 소비 여력 축소로 세트 실판매가 예상 대비 부진한 흐름을 보였으나, 2분기 들어 산업 생태계 전반의 재고 건전성 회복이 점진적으로 나타나며 패널 구매가 증가하는 국면을 맞이하게 됐습니다. 최악의 시장 상황은 벗어난 것으로 판단되지만, 아직까지는 실수요와 연동된 완전한 회복 단계에 진입한 것으로 보기 어려운 상황이기도 합니다.

Speaker 11

Good afternoon, this is CFO Sung Hyun Kim. Looking back to the first half of the year, actual set sales fell short of expectations, with macroeconomic uncertainties persisting and consumer sentiment dampening. Inventory soundness began to improve in Q2 across the ecosystem, leading to actual growth in panel purchase. It appears that the market is now over the worst, but not yet starting a full recovery backed by real demand.

Sung Hyun Kim (CFO)

이에 따라 재무체력 강화를 우선 과제로 하여, 지난 일분기에 이어 이분기에도 사업 구조 고도화를 위한 전략적 자금 조달 활동을 실시하여 유동성을 한층 강화하였습니다. 비용 감축 노력으로는 고정비 축소, 인력 운영 효율화, 3배 탄력적 운영 등의 활동을 지속해 나가고 있습니다.

Speaker 11

Consequently, the company further propped up liquidity through strategic financing activities in Q2 as well, for the purpose of upgrading our business structure with our priority strengthening our financial structure. Cost saving initiatives like reducing fixed cost, manpower deployment efficiency, and flexible operation of fabs are still ongoing.

Sung Hyun Kim (CFO)

사업 구조 고도화 측면에서는 하반기 모바일 제품 출하 확대 등 수제형 사업의 비중과 사업 성과를 지속 높여갈 것입니다. 수제형 사업의 전사 내 매출 비중은 올해 40%를 상회하고, 내년에는 50% 이상으로 확대할 것으로 예상합니다. 나아가 향후 2, 3년 이내에 70% 수준에 도달할 것을 목표로 하고 있습니다.

Speaker 11

To upgrade our business structure, we will keep increasing the share and performance of contract-based business in the second half, including mobile products. Contract-based businesses revenue mix is expected to top 40% this year and 50% next year. The target is 70% in the next two to three years.

Sung Hyun Kim (CFO)

더불어 대형 및 중소형을 아우르는 전 제품군에서 OLED 비중과 사업 경쟁력을 더욱 강화해 나가겠습니다. OLED 밸류에 대한 시장 인식이 높아지는 만큼, OLED의 전사 내 매출 비중은 올해 50%를 넘어서고, 이후 지속적으로 확대될 것으로 전망하고 있습니다.

Speaker 11

The company will also strengthen the share and business competitiveness of OLED in all categories that cut across all the different sizes of panel. With improving market awareness of OLED value, its company-wide revenue mix is expected to surpass 50% this year and keep growing thereafter. By product category, large OLED business will keep running on the basis of real demand, while broadening the customer base and consolidating its market position in the premium TV market. It will not be bound to the traditional TV market as the product portfolio keeps diversifying into new applications like gaming and transparent. It will also keep implementing cost innovation and improving expense structure efficiency. For mid-size OLED, the company is steadfastly building up the structure to respond to mass production in the first half of 2024.

We will keep strengthening its business capability by preempting the market and ensuring stable operations. For a medium LCD, we will focus on recovering profitability by enabling high efficiency production system and cost innovation, while solidifying our leadership by targeting the premium monitor and laptop markets based on differentiated competitiveness. In small OLED business, we will grow the shipment volume and improve business consistency based on production ramp-up and technological capability. In auto, we continue to improve business performance on the basis of reliable supply, thanks to dedicated capacity, as well as technology that can provide differentiated value like Tandem OLED. The company will focus on growing our revenue and increasing orders on top of differentiated technological competitiveness and customer relations across OLED and high-end LCD, and boost our position as the world's number one.

Going into the second half, turnaround to profit is expected in Q4 on anticipation of high panel demand by set makers following the return to healthy inventory levels and growth in contract-based business. As explained earlier, the market is yet to start full recovery, driven by real demand. The company will keep a close eye on the external environment as we strive towards more meaningful performance by focusing on recovering financial soundness and upgrading the business structure. Thank you very much for your attention. That brings us to the end of earnings presentation for Q2 2023. We will now take your questions. Operator, please commence with the Q&A session.

Operator (participant)

Q&A session will begin. Please press star one, that is star and one, if you have any questions. Questions will be taken according to the order you press the number star one. For cancellation, please press star two, that is star and two on your phone. In order to allow as many Q&A chances as possible within the restricted time, we would appreciate only two questions per each participant.

처음으로 질문해주실 분은 KB증권의 김동원 님입니다. The first question will be provided by Dongwon Kim from KB Securities. Please go ahead with your question.

Dongwon Kim (Equity Research Analyst - Technology)

예, 질문 기회 감사드립니다. 저는 OLED와 전사 실적 관련해 질문드리겠습니다. 지난해 중소형 OLED의 어, 경우에 보면 기술적인 문제로 패널 생산 차질이 발생해 출하가 감소한 것으로 알고 있습니다. 올해 중소형 OLED 패널 생산에 있어서 이 지난해와 같은 테크니컬 이슈로 당초 계획 대비 출하 감소 가능성이 있는지 궁금합니다. 두 번째로는 현재 우리 회사가 보면 오개 분기 연속 적자가 지속이 되고 있는데요. 어, CFO님께서 사 분기 흑자 전망을 어, 언급하셨습니다. 이 대형, 중소형, 차량용 등 사업부별로 나눠볼 때 어떤 사업부가 흑자 전환을 견인할 것으로 보시는지, 그리고 요인은 무엇인지 말씀해 주시면 감사드리겠습니다. 이상입니다. 네, 저 IR 실장 Huah Sok입니다.

Speaker 11

For taking your questions. My questions are with regard to OLED as well as the consolidated performance. For the small and midsize OLED, last year, due to technical issues, the shipment of panels was reduced. Does the company expect similar technical issues this year for small and midsize OLED panels? Does the company believe that there would be similar issues that would also reduce the shipment than the initial plan? My second question is, the company has now been seeing losses for the past five quarters straight. In the presentation, it was mentioned that the company is now expecting a turnaround in the fourth quarter of this year. From which business will the biggest contribution come? Will it be the large OLED, the small to mid-size OLED or any other businesses? What are the reasons for the drivers for such a contribution from that particular business?

Brian Huah (Head of Investor Relations)

네, 첫 번째 질문 먼저 답변드리겠습니다. IR 실장 허석입니다. 고객과 관련된 내용은 일단 먼저 구체적으로 언급할 수 없는 점을 이해해 주시기를 바라겠습니다. 저희 당사가 지금 말씀드릴 수 있는 내용은 올해 하반기부터 저희가 확장된 양산 캐파를 기반으로 해서 전년 대비 출하 증가를 기대하고, 이를 바탕으로 전사 실적을 개선해 나갈 그런 계획을 갖고 있습니다. 이상입니다.

Speaker 11

Thank you very much for your questions. This is Brian Huah, in charge of LG Display's IR. First of all, let me clarify that we are not able to comment on any situation involving the customer. For the second half of the year, based on our expanded mass production capability, the company intend to increase shipments. By doing so, we also plan to improve our consolidated earnings.

Seung Min Lim (Chief Strategy Officer)

네, 두 번째 질문 답변드리도록 하겠습니다. 아시다시피, CFO 하이라이트에서 말씀드렸던 대로, 전반적인 시장의 재고가 줄어들고 있기 때문에 대형, 중형 모두, 손익의 개선 흐름을 예상하고 있습니다.

Speaker 11

Now, this is the CSO responding to your second part of the question. As the CFO has already explained in his presentation of the highlights, we see that the inventory level is going down across the market. As a result, we see that the profitability is going to improve on both the large as well as the medium-sized OLED.

Seung Min Lim (Chief Strategy Officer)

어, 그럼에도 불구하고 하반기 실적 개선의 모멘텀이 가장 큰 부분은 좀 전에 허석 IR 실장이 말씀드렸던 대로 캐파의 증설과, 어, 물동 증가가 예상되는 소형 부분이 될 것입니다.

Speaker 11

Now, that having said, where we are expecting the biggest momentum to come in the second half is, as Mr. Brian Huah has just explained, is from the capacity increase as well as the increase in the volume of the small size panels.

Dongwon Kim (Equity Research Analyst - Technology)

네, 다음 추가 질문 받도록 하겠습니다.

Operator (participant)

다음으로 질문해 주실 분은 하나증권의 김현수 님입니다. The following question will be presented by Hyunsu Kim from Hana Securities. Please go ahead with your question.

Seung Hwan Kim (Assistant Manager)

예, 안녕하십니까? 질문 기회 주셔서 감사합니다. Hana Securities의 Hyunsu Kim입니다. 두 가지 여쭤보고 싶은데요. 일단은 투자와 EBITDA와 관련돼서 좀 여쭤보겠습니다. 연간 투자 금액에 대해서는 기존에 가이던스가 대략 KRW 3조 중후반 정도였었는데요. 여러 가지 좀 상황을 거치는 과정에서 좀 큰 변화가 있는지, 여기에서 좀 변화가 있는지 궁금하고요. 그리고 이제 올해, 내년 예상 투자 금액과 그리고 이게 이제 EBITDA와 비교했을 때 어느 정도 되는지에 대해서도 좀 말씀 부탁드리겠습니다. 그리고 이제 두 번째는 역시 투자에 관한 건데요. OLED IT 6세대 투자 진행하고 계신데, 현재 진행 상황에 대해서 궁금하고요. 향후에 국내 고객사와의 IT 패널 협업 과정에서 8세대 라인 투자에 대해서는 어떻게 보고 계신지 궁금합니다. 감사합니다.

Speaker 11

Thank you very much. I also have two questions. They are pertaining to investment and EBITDA. First, about the annual investment, the company's guidance was somewhere in the mid to high KRW 3 trillion level for the year. Having gone through quite a lot of the changes in the circumstances, I wonder whether the numbers remain unchanged or whether there are any changes to the number for the annual investment? Also, what would be the expected investment for the years 2023 and 2024? Also, what would be the company's guidance for EBITDA? The second part of the question is also about investment, particularly in OLED IT. I understand that the company is now investing in the OLED IT, Gen 6.

If the company can provide us an update regarding that investment. Now, with the company's client in North America, what would be the plan for the IT investment for Gen 8?

Sung Hyun Kim (CFO)

안녕하세요, CFO입니다. 올해 연간 투자 금액의 기존의 가이던스를 저희가 KRW 3 trillion mid-to-late range라고 말씀드린 바가 있습니다. 현재 저희가 그 가이던스 드린 바 내에서, 기본적으로 투자를 해야 될 내용들은, 투자를 진행을 하고 있고요. 다만, 그 비용을 효율화하기 위한 노력은 별개로 또 진행을 같이 하고 있습니다.

Speaker 11

Thank you. This is the CFO responding to your question. Yes, the company has given the guidance of mid to high KRW 3 trillion level for the annual investment. Currently, investment is underway where it is necessary within the guidance range. Of course, at the same time, we are conducting efforts in parallel to improve the efficiency of the investment as well as spending.

Sung Hyun Kim (CFO)

뭐 투자자 여러분들께서 너무 잘 아시는 바와 같이, 우리 업계, 그, 투자 관련된 사항들은 미리 선발주가 이루어지고, 그거에 따라서 그 조금 긴 기간 동안 장기간으로 걸쳐서 이루어지는 부분이라, 실질적으로 그 투자 금액 조정을 굉장히, 회사 상황에 맞춰서 탄력적으로 많은 금액을 운용하기는 쉽지가 않은 상황입니다.

Speaker 11

As the investors would be aware, in this industry, investment is implemented over a long period after pre-orders. That means that it is not easy to flexibly adjust the investment amount, given the circumstances.

Sung Hyun Kim (CFO)

내년 투자 금액도 궁금해 하신다고 말씀을 주셨는데요. Uh, 내년 사업 계획에 대해서는 아직 그 확정된 바는 없습니다마는, uh, 진행 중인 투자와, uh, 기타 여러 가지 계획을 기본적으로 검토한 결과를 뭐 조금 말씀드리면은, 내년에는 그 삼조 원 중후반대에 올해보다는, uh, 꽤, uh, 의미 있는 금액 정도는 줄일 수 있을 것 같습니다.

Speaker 11

There was also a question about the expected investment for next year. Of course, the business plan for next year is yet to be finalized, perhaps I can share with you some of the, let's say, some of the findings of the review that we have had so far regarding our investment plan. For next year, perhaps, our thinking now is that there can be some meaningful reduction from the mid to high level, KRW 3 trillion level of investment of this year.

Sung Hyun Kim (CFO)

그 기 공시 드렸던 6세대 IT OLED 관련 투자는 예정대로 진행이 잘 되고 있고요. 아시다시피, 내년 상반기까지는 투자가 진행이 되어야 될 것 같습니다. 8세대 투자 가능성에 대해서 여쭤보셨는데요. 이거는 역시 또 고객과 관련된 사항이기도 하고, 아직은 확정된 바가 없습니다. 저희가 지켜보고 있는 것들은 기술의 발전 가능성과 어느 정도 진척이 일어나는가, 시장에서 얼마나 demand가 회사 수익에 기여할 수 있는 부분까지 그 발전이 되고 있는 것인가? 그런 것들 면밀하게 살펴보고, 나중에 결정을 할 때가 되면 결정을 하도록 하겠습니다.

Speaker 11

As the company has already disclosed, the investment into IT OLED Gen 6 is currently underway, and this will continue into the first half of next year. There was also another question about investment, potential investment in Gen 8. Of course, this is related to a customer and also for ourselves, what we look into, some of the factors that we consider are the technological development as well as the progress being made, and also whether there is development in the demand from the market that is sufficient to contribute to the company's profitability. There are a host of factors that we consider before we make the decision about investment. We will do so again this time, in due time, after considering all the different factors.

Seung Hwan Kim (Assistant Manager)

네, 다음 질문 추가로 받도록 하겠습니다.

Operator (participant)

다음으로 질문해 주실 분은 Bank of America의 시몬 우님입니다. The following question will be presented by Simon Wu from Bank of America. Please go ahead with your question.

Simon Wu (Director - Hedge Fund Credit)

질문 기회 주셔서 감사합니다. 우동재. 그 첫 번째 질문은 아까 이제 Q4에 나름대로 뭐 흑자 전환 코멘트가 있으셨는데, 뭐 단순하게 생각하고 보면.

지금 패널 가격 오르는 부분은 그 LCD TV 쪽이지, 다른 쪽은 좀 오르지 않는 것 같거든. 그래서 그 로직이 어떤 근거 하에 4분기에 흑자 달성이 가능하신지요? 그게 질문인데요. 특히 이제 우리가 줄일 만큼 많은 비용을 이미 줄이신 것 같거든요. 그리고 이제 물량이 하반기에, 물론 상반기 대비 늘어나겠지만, 과연 그걸로 인해서 우리가 2분기에 거의 KRW 1 trillion 가까이 되는 영업 적자 폭이 바로 0으로 될 수 있는 그 로직을 좀 확실하게 이해하고 싶어서인 게 저희 첫 번째 질문이고요. 두 번째 질문은 좀 죄송하지만 차입금이 계속 늘어나고는 있는데, 현재 그 2분기에 그 금융 이자 비용이 어느 정도 발생했는지 알려주시면 저희가 연간 금융 비용 트렌드를 전망하는 데 도움이 될 것 같습니다. 감사합니다.

Speaker 11

Now, thank you very much. There was a mention about the turnaround to profit in the fourth quarter. Just thinking about this simply then, we see panel price rising, I believe only in LCD TV and not in others. I am trying to better understand the rationale behind the expectation of turnaround in Q4, especially because the company appears to have done most of the cost reductions that it can. Of course, there is going to be some volume increase in the second half compared to the first half. Still, I'm not sure whether that would be sufficient to move the company from almost a KRW 1 trillion loss in one quarter to the, to almost zero next. Again, I'm trying to better understand the rationale, I would like to ask for further elaboration.

The second question is, now I see that there has been a steady increase in borrowing. What would be the company's interest expense in Q2? That would be helpful for us to calculate the financial cost over the year. This is the CFO speaking. The question was about the interest expense or the financial expense for Q2. I know that you're simply going to multiply that number by four, I would just like to go right ahead and give you the annual number, which is expected to be between KRW 600 billion. This is the CSO I would like to comment on the turnaround, expected turnaround in Q4. As was explained earlier, our small panels, they account for about 20%.

Over the next 2 quarters, there is an expected increase of 10 percentage points each quarter. Because of the small panel, as you would know, has very high seasonality, and there's also the new fab that we are operating. Another factor is the mid-sized IT, which has taken up the biggest share out of our revenue in Q2. Now, of course, the price for TV is moving up, compared to that, it is true that for the mid-size IT, there is not such a big movement. It appears as if the price for mid-size IT is also bottoming out, and we have been seeing slight increase, and we believe that that is also going to contribute to profitability.

Operator (participant)

The following question will be presented by Junghoon Chang from Samsung Securities. Please go ahead with your question.

Junghoon Chang (Equity Analyst - Battery and Display)

네, Samsung Securities Junghoon Chang입니다. 질문 기회 주셔서 감사드리고요. 저도 two 가지 좀 질문을 좀 드리고 싶은데, 일단은 CFO께서 Q4 흑자 전환을 이제 얘기를 주셨고, Q3에 대해서는 특별하게 개선에 대한 정도만 얘기했지, 좀 가이드가 좀 없다라고 좀 보고 있는데, 이 부분들이 이제 모바일 쪽에 출하 지연을 좀 감안한 부분들인지, 아니면 그와 무관하게 시장 상황이 전반적인 시장 상황 얘기를 이제 감안해서 Q3도 BEP 넘어서는 부분에 있어서 가이드가 어려운 부분인지 좀 설명 부탁드리겠고요. Second는 이제 대형 white OLED 부분들의 신규 고객에 대한 부분들이 뭐 이미 뭐 언론 보도에서 나왔지만, 시작이 될 가능성에 대해서 정도만 가이드가 있는 상황이어서, 이 부분에 대해서 좀 하이라이트가 가능하시다면 말씀을 부탁드리고, 내년에는 전반적으로 좀 이르긴 하지만 사업계...

Brian Huah (Head of Investor Relations)

The first question, yes, the CFO commented on a possible turnaround in Q4, and I think for Q3, it was just about improvement. No specific guidance as far as I understood. I wonder whether this incorporates the possibility of delay in mobile shipment in the second half, or is it regardless of that, meaning that it is just in consideration of the overall market circumstances, and that the company believes that it would be difficult to go over the BEP in the third quarter? The second question is now, yes, that there have been press reports about a new customer in the large IT OLED, but then the company's guidance was simply about the possibility of starting a new partnership.

Speaker 11

If there could be some further highlights regarding this, then it would be appreciated. Based on this, then of course, the business plan, I'm sure, has not been finalized. What would be the company's expectation of the volume for next year?

Brian Huah (Head of Investor Relations)

Yes, CFO.

Sung Hyun Kim (CFO)

This is the CFO speaking. The question was about the potential turnaround in Q4 and the improvement in Q3. Overall, it is clear that there is improvement in Q3. The questionnaire also asked about whether the mobile shipment delay is reflected in this projection or whether it is simply based on the rise in LCD prices in the market mobile.

For the mobile shipment delay, I must clarify that the company has never commented on it. In principle, regarding the market volatility or the company's inside operations, in principle, we always remain conservative. For Q3, what we are expecting is that there is going to be a faster improvement in Q3 than what we have seen between Q1 and Q2. That improvement is going to accelerate in Q4 to achieve a turnaround.

Brian Huah (Head of Investor Relations)

Uh, inaudible.

Sung Hyun Kim (CFO)

Also you asked about a new customer in large size. Please understand that, given the nature of our business and our industry, we are not in a position to comment on anything related to the customer, and that is the set maker's position, please understand. That also means that there are no highlights for me to present to you at this time. There was another question about the potential volume next year, and again, there is nothing for me to comment on at this time.

Operator (participant)

The final question will be presented by Sunu Kim from Meritz Securities. Please go ahead with your question.

Sunwoo Kim (Senior Analyst)

Of course, the demand remains uncertain in many categories. In TV as well, I mean, the demand is uncertain. Thanks to some corrections in supply, the pricing for TV continues to rise. We do not see such conviction in IT. For the mid to long term, what we believe to have almost a certain growth in demand is the auto display category. That is what the market tends to believe, and I believe that the company also has a similar expectation. For the medium term, what would be the potential orders received for the auto business? Also, what is the company's plan for the auto orders to be received for this year and next year?

And also, what would be the revenue to be recognized in this business, again for this year and next? If such information can be shared with us, then that would be much helpful.

Ki Hwan Son (VP of Auto Marketing)

This is Ki Hwan Son, Vice President of Auto Marketing, responding to your question. Up to the second quarter, for the OLED or orders received for, it has been, KRW 4 trillion. We believe that so the orders continue to grow, we are currently continuing to upwardly adjust the expected orders for next year and the year after that.

As for the order backlog, it is currently KRW 20 trillion, and it is going to be helpful in achieving a consistent growth in revenue. We believe that there is going to be an annual growth by mid-10% until 2027.

Brian Huah (Head of Investor Relations)

If there is one last question, we would like to entertain one more.

Operator (participant)

The final question will be presented by Jae Hyun Kwon from JP Morgan Securities. Please go ahead with your question.

Jae Hyun Kwon (Assistant Relationship Manager)

I have one question, and that is about the Chinese, about the company's LCD fab business in Guangzhou, China. What would be the timing of the sell-off and also about the tangible asset disposal? Regarding the LCD fab in Guangzhou, China, is there any update that can be shared with us? In relation to that, when does the company believe that such update can be provided officially in the market?

Ki Hwan Son (VP of Auto Marketing)

Now, I do realize that there are a lot of speculations in the market, regarding the LCD fab in Guangzhou, but what is for certain now is that about half of it is still running. In terms of the asset rationalization, or so we are trying to rationalize the use of the assets, but nothing is determined yet. Regarding this, there is really no progress for me to share with the market. Thank you very much. That concludes the LG Display 2023 second quarter earnings results conference call. Thank you. If there are any additional comments or questions, please contact the IR team.