LG Display Co Ltd (LPL) 2016 Q3 法說會逐字稿

(interpreted) Ladies and gentlemen, welcome to LG Display's third quarter of 2016 earnings release conference call. We will begin with a presentation followed by a Q&A session. (Operator instructions). Now we will start the presentation. Ma'am, please begin.

（解讀）女士們、先生們，歡迎參加 LG Display 2016 年第三季財報電話會議。我們將從演示開始，然後進行問答環節。 （操作員說明）。現在我們開始示範。女士，請開始。

(interpreted) Good morning, thank you for joining LG Display's Q3 2016 earnings conference call. I am Hee-Yeon Kim, Head of IR and I would like to thank everyone for joining us on this conference call.

（翻譯）早安，感謝您參加 LG Display 2016 年第三季財報電話會議。我是 IR 主管 Hee-Yeon Kim，我要感謝大家參加我們的電話會議。

Joining me at the conference call today are CFO Sang-Don Kim; Young-Kwon Song, Senior Vice President of Strategy and Marketing Group; Duck-Young Kim, Head of Corporate Business Management Division; and Stephen Ko, Head of Market Intelligence.

與我一起參加今天電話會議的是財務長 Sang-Don Kim； Young-Kwon Song，策略與行銷集團資深副總裁； Duck-Young Kim，企業業務管理部主管；和市場情報主管 Stephen Ko。

Today's earning presentation will last around one hour. There will be a presentation on Q3 earnings and market outlook, followed by Q&A. Please refer to our website and attachment to our disclosures for more details regarding Q3 results. For those of you joining us via webcast, please refer to the references in the widget on the bottom left corner.

今天的財報演示將持續約一小時。將介紹第三季收益和市場前景，然後進行問答。有關第三季業績的更多詳細信息，請參閱我們的網站和披露附件。對於透過網路廣播加入我們的人，請參閱左下角小工具中的參考資料。

Before we begin the presentation, please take a moment to read the disclaimer. Please note that today's results are based on the consolidated IFRS standards prepared for your benefit and have not yet been audited by an outside auditor.

在我們開始演示之前，請花點時間閱讀免責聲明。請注意，今天的結果是基於為您的利益而製定的綜合國際財務報告準則標準，尚未經過外部審計師的審計。

With that said, our CFO, Sang-Don Kim, will now start the presentation on Q3 2016 earnings results.

話雖如此，我們的財務長 Sang-Don Kim 現在將開始介紹 2016 年第三季的獲利結果。

(interpreted) Good morning. This is Don Kim, CFO of LG Display. I would like to thank our shareholders, analysts and investors for joining LG Display's Q3 earnings release conference call. Let me begin with Q3 earnings results, followed by future market outlook and the Company's strategic direction.

（翻譯）早安。我是 LG Display 財務長 Don Kim。我要感謝我們的股東、分析師和投資者參加 LG Display 第三季財報電話會議。首先介紹第三季的獲利結果，然後介紹未來的市場前景和公司的策略方向。

Looking back to Q3, supply-demand dynamics remain robust and ASP maintained a favorable trend across the display industry as production constraints on the supply side and migration to bigger TVs on the demand side continued.

回顧第三季度，供需動態依然強勁，由於供應方的生產限制和需求方繼續轉向更大的電視，整個顯示器行業的平均售價保持了良好的趨勢。

Amidst the positive market dynamics, the Company was able to stay in the black for several quarters with a sizeable operating profit despite unfavorable currency movements. We expanded our premium product mix and stepped up cost-saving efforts.

在積極的市場動態中，儘管匯率波動不利，公司仍能夠連續幾季保持獲利，並獲得可觀的營業利潤。我們擴大了優質產品組合，加強了成本節約力道。

We also look forward to more qualitative earnings improvement in OLED TV. For large sized OLED TVs, EBITDA remains in the black thanks to productivity improvement and shipment increase. Next year, there will be increase in both the volume and customers as we ramp up capacity, but currency movement held back our profit improvement. Whereas the average exchange rate in Q2 was KRW1162, it was KRW1118 in Q3, a move by KRW44.

我們也期待OLED電視的獲利有更多質的提升。對於大尺寸 OLED 電視，由於生產力提高和出貨量增加，EBITDA 仍保持獲利。明年，隨著我們產能的增加，數量和客戶都會增加，但匯率變動阻礙了我們利潤的提高。第二季的平均匯率為 1,162 韓元，而第三季的平均匯率為 1,118 韓元，變動了 44 韓元。

Now let me move on to Q3 earnings results in more detail. Revenue in Q3 was KRW6724 billion, up 15% quarter-on-quarter. This is largely owed to the general rise in ASP in large size products, increase in shipment due to seasonality and migration to bigger size.

現在讓我更詳細地介紹第三季的獲利結果。第三季營收為67,240億韓元，季增15%。這主要是由於大尺寸產品的平均售價普遍上漲、季節性導致的出貨量增加以及向更大尺寸的遷移。

Operating income came in at KRW323 billion, an increase by 634%. The Company was able to achieve higher profit despite the strong won. This is largely owed to the upward trend in ASP in Q3, premium focused product mix such as UHD TVs, IPS monitors and new mobile products, as well as continuous cost-saving efforts.

營業收入達3,230億韓元，成長634%。儘管獲利強勁，公司仍能實現更高的利潤。這主要歸功於第三季平均售價的上升趨勢、超高清電視、IPS 顯示器和新行動產品等高階產品組合，以及持續的成本節約努力。

To elaborate more on Q3 area shipment in ASP, area shipment was 10.86 million square meters, up 9% quarter-on-quarter, outperforming the guidance. Shipment increased across large size products, including TVs, on seasonality and continuous size migration.

詳細說明第三季平均售價出貨面積，出貨面積為 1,086 萬平方米，較上季成長 9%，優於指引。由於季節性和尺寸持續遷移，包括電視在內的大尺寸產品的出貨量增加。

Now, we were able to support the area shipment growth in Q3 by increasing our capacity by 7%. The additional capacity in Guangzhou China went into operation and we improved the efficiency of the line and process to prepare for seasonality.

現在，我們能夠透過將產能增加 7% 來支援第三季的出貨面積成長。中國廣州的新增產能投入運營，我們提高了生產線和流程的效率，為季節性做好準備。

Blended ASP was also up by 10% quarter-on-quarter, thanks to the general rise in ASP in large size panel and product mix effect. For TVs, ASP rose significantly for 40 inch and above following the ASP rise in 32 inch as area demand keeps rising and supply for large size remains tight due to industry restructuring. For IT as well, ASP continued to rise thanks to the IT supply constraints related to TV and inventory reduction.

得益於大尺寸面板平均售價普遍上漲以及產品組合效應，混合平均售價也較上季上漲10%。電視方面，繼32吋電視平均售價上漲後，40吋以上電視的平均售價大幅上漲，因為大尺寸電視的需求持續上升，而由於產業重組，大尺寸的供應仍然緊張。對於 IT 而言，由於與電視和庫存減少相關的 IT 供應限制，平均售價持續上升。

With shipment and ASP increasing in all product categories explained so far, revenue share by product remains little changed from the previous quarter. Small to mid-panel share, which had been rising, remained flat quarter-on-quarter, unlike in the previous year, because of the base effect coming from the ASP increase in large size panels. But we expect its share to rise again in Q4 on seasonality and new product shipment.

到目前為止，所有產品類別的出貨量和平均售價均有所增加，按產品劃分的收入份額與上一季相比幾乎沒有變化。由於大尺寸面板平均售價上漲帶來的基數效應，一直在上升的中小型面板份額與去年同期持平。但我們預計，由於季節性和新產品出貨量，其份額將在第四季度再次上升。

As for our financial performance, inventory was KRW2492 billion, almost flat quarter-on-quarter as we prepared strategic inventory to be ready for new small to mid-size products in Q4. But for large size panels, much of the inventory has been used up in response to seasonality and high-end product shipment increase, leaving the inventory very tight as at the end of Q3.

至於我們的財務業績，庫存為 2,492 億韓元，環比幾乎持平，因為我們準備了戰略庫存，為第四季度的新中小型產品做好準備。但對於大尺寸面板來說，由於季節性和高端產品出貨量增加，大部分庫存已被耗盡，導致第三季末庫存非常緊張。

Overall, the Company remains in sound financial position, although debt to equity ratio rose slightly on increased accounts payable for components and materials to prepare for seasonality in small to mid-size products.

總體而言，公司的財務狀況仍然良好，儘管由於為應對中小型產品的季節性變化而增加了零件和材料的應付帳款，導致負債與權益比率略有上升。

Cash at the end of the quarter was KRW2481 billion, similar to the previous quarter after accounting for investing and financing activities.

考慮投資和融資活動後，本季末現金為 2,481 億韓元，與上一季持平。

Now next is on market outlook at the Company's strategic direction in more detail.

接下來更詳細地介紹公司策略方向的市場前景。

We expect continued improvement in supply demand in ASP in to Q4. Supply is expected to remain tight in TV and IT as a result of continued size migration and industrial restructuring. ASP for 32 inch will stabilize after having risen sharply, but for 40 inch and above, it will maintain an upward trend.

我們預計第四季平均售價的供應需求將持續改善。由於持續的規模遷移和產業重組，預計電視和 IT 領域的供應仍將緊張。 32吋的ASP在大幅上漲後將趨於穩定，但40吋以上的ASP將維持上升趨勢。

Now looking ahead to 2017, supply demand is expected to remain robust and ASP generally stable as migration to bigger TVs continues and supply capacity becomes limited due to some companies' fab closing.

現在展望 2017 年，隨著向更大電視的遷移繼續進行，以及由於一些公司關閉晶圓廠而導致供應能力變得有限，供應需求預計將保持強勁，平均售價總體穩定。

It appears that the key for supply-demand balance for next year will be panel suppliers' size and mix strategy and said companies' change in purchasing stance according to profitability. We will closely monitor these factors.

看來明年供需平衡的關鍵將是面板供應商的規模和組合策略，並表示各公司將根據獲利能力改變採購立場。我們將密切關注這些因素。

Moving on to Q4 guidance, we expect continued size migration to bigger screens and increase in shipment of small to mid sizes for major customers. But area shipment is projected to be generally flat quarter-on-quarter due to low inventory and capacity limitation.

轉向第四季度的指導，我們預計尺寸將繼續向更大的螢幕遷移，並為主要客戶增加中小型尺寸的出貨量。但由於庫存較低和產能限制，預計面積出貨量將較上季持平。

As for the ASP, as explained already, it is expected to remain on an upward trajectory on size migration and supply cutbacks. In particular, ASP for 40 inch and above is expected to rise, which will help strengthen and expand the Company's profit improvement in Q4 as we have a high share of large size panels against total revenue.

至於平均售價，正如已經解釋的那樣，預計由於尺寸遷移和供應減少，其將保持上升趨勢。特別是40英寸及以上的平均售價預計將上升，這將有助於加強和擴大公司第四季度的利潤改善，因為我們在總收入中大尺寸面板的份額較高。

Now, let me elaborate on our corporate strategy. Going into next year, we expect the overall supply and demand dynamics in the panel market to improve further. But we will keep a close eye on market movements as different patterns might emerge in different sizes depending on the supply demand. We will deploy fab mix strategy with an eye toward maximizing profitability.

現在，讓我詳細闡述我們的企業策略。進入明年，我們預計面板市場的整體供需動態將進一步改善。但我們將密切關注市場走勢，因為根據供應需求，可能會出現不同規模的不同模式。我們將部署晶圓廠混合策略，著眼於利潤最大化。

Other factors requiring careful monitoring are currency movements and inventory risks from changing demand as they could affect our financial performance next year.

其他需要仔細監控的因素包括貨幣走勢和需求變化帶來的庫存風險，因為它們可能會影響我們明年的財務表現。

To elaborate, in large size LCD, there appears to be high growth potential in bigger sizes and high resolution products. We will thus strengthen our work to develop differentiated products based on our technology such as IPS and M-Plus. We will also try to maximize profitability by sustaining our cost-saving efforts.

詳細來說，在大尺寸液晶顯示器中，更大尺寸和高解析度的產品似乎具有很高的成長潛力。因此，我們將加強工作，開發基於我們技術的差異化產品，如 IPS 和 M-Plus。我們還將努力透過持續節約成本的努力來實現利潤最大化。

For OLED TV, we will prepare to solidify our position in the premium market. We plan to keep improving productivity such as yield and processes, reduce costs and successfully implement mass production of 25,000 capacity for Gen-8 to be added in the first half of next year. This will help expand and diversify our customer base.

對於OLED電視，我們將準備好鞏固我們在高端市場的地位。我們計劃持續提升良率、製程等生產力，降低成本，並於明年上半年成功實現八代產能25,000片的量產。這將有助於擴大我們的客戶群並使其多樣化。

In the small to mid-size mobile device market next year, transition from LCD to POLED is expected to accelerate. The Company will lay the groundwork next year to expand the small to mid-size plastic OLED business. We will secure mass production stability for the Generation 6 E5 and technological competitiveness, while strengthening business cooperation with various customers.

明年中小型行動裝置市場，從LCD轉向POLED的轉變預計將加速。公司將於明年為擴大中小型塑膠OLED業務奠定基礎。我們將確保第六代E5的量產穩定性和技術競爭力，同時加強與各客戶的業務合作。

The Company will maintain timely investment in OLED to capture opportunities for the future, while rigorously controlling resources spanning from investment expenses and working capital to deliver better profitability going forward. Thank you.

公司將繼續及時投資OLED，抓住未來機遇，同時嚴格控制投資費用和營運資金等資源，以實現未來更好的獲利能力。謝謝。

(interpreted) That brings us to the end of earnings presentation for Q3 2016. We will now take your questions. Operator, please commence with the Q&A session.

（解釋）2016 年第三季的收益報告到此結束。現在我們將回答您的問題。接線生，請開始問答環節。

(interpreted) We will now begin our Q&A session. (Operator instructions). Our first question is from Nicolas Gaudois at UBS. Please ask your question.

（翻譯）我們現在開始問答環節。 （操作員說明）。我們的第一個問題來自瑞銀集團的尼可拉斯高杜瓦。請提出你的問題。

Yes, good morning, thanks for taking my question; I've got one and a follow-up. The first question is, if I recall in the second quarter, you were close to EBITDA break even for OLED TV panels, if you could update us on where you stood in Q3 and what you expect in Q4 and what are the key areas of improvement we've seen promises for the reduction of OLED TV panel losses. Then I have a follow-up after this, thank you.

是的，早安，感謝您提出我的問題；我有一個和一個後續。第一個問題是，如果我記得第二季度，OLED 電視面板的 EBITDA 接近收支平衡，您能否向我們介紹您在第三季度的最新情況以及您對第四季度的期望以及哪些關鍵改進領域我們已經看到了減少OLED 電視面板損失的承諾。然後我會進行後續跟進，謝謝。

(interpreted) Now this is the CFO speaking. Now for the OLED TV panel, now as we have explained earlier, now we have turned around to a stable profit in the second half. So for next year we are going to increase the capacity and, along with that, of course there's going to be some additional depreciation and amortization. But we do believe that, overall, we will be able to maintain the EBITDA in the black.

（口譯）現在這是財務長的演講。現在對於OLED電視面板來說，正如我們之前解釋的那樣，現在我們已經在下半年實現了穩定的利潤。因此，明年我們將增加產能，同時，當然還會有一些額外的折舊和攤提。但我們確實相信，總體而言，我們將能夠保持 EBITDA 獲利。

As for the key areas of improvement that helped improve the profitability of the OLED TV panel, well I would say that it's the improvement in productivity. First of all, yield remains quite stable and also there has been increase in shipment.

至於有助於提高OLED電視面板獲利能力的關鍵改進領域，我想說的是生產力的提高。首先，產量保持相當穩定，出貨量也有所增加。

Thank you, and as a follow-up, it looks like you're basically broadly on track to meet your CapEx guidance for the full year. Could you elaborate a little bit where you think you would land within the initial guidance you gave us back in January? And how do we split this between LCD large-panel OLED and small-panel OLED, and your initial view on how these [three buckets] will trend into 2017, thank you.

謝謝，作為後續行動，看起來您基本上已基本達到全年資本支出指導目標。您能否詳細說明您認為您會在 1 月給我們的初步指導範圍內達到什麼目標？我們如何在 LCD 大面板 OLED 和小面板 OLED 之間進行劃分，以及您對這三者在 2017 年將如何發展的初步看法，謝謝。

(interpreted) Now, first, let me take your questions about the CapEx for 2016. Now as you have rightly observed, yes, the CapEx spending for this year is largely in line with our initial guidance offered at the earlier part of this year, and for the year we believe that this will be around mid-KRW4 trillion level.

（解釋）現在，首先讓我回答你們關於 2016 年資本支出的問題。正如你們所觀察到的，是的，今年的資本支出在很大程度上符合我們今年早些時候提供的初步指導，我們認為今年這數字將達到4 兆韓元左右的水準。

Now moving onto our CapEx plan for 2017, now per our very firm strategic direction, we believe that it is inevitable that we increase CapEx for OLED, especially plastic OLED, in order to prepare for future opportunities. Now, for your information, for the year 2016 the percentage of CapEx going to OLED was about 50%, and for next year we believe that it's going to be at least 70%, so there is going to be more focus on OLED.

現在轉向 2017 年的資本支出計劃，根據我們非常堅定的策略方向，我們相信增加 OLED（尤其是塑膠 OLED）的資本支出是不可避免的，以便為未來的機會做好準備。現在，供您參考，2016 年 OLED 的資本支出百分比約為 50%，而明年我們相信該比例將至少達到 70%，因此將更加關注 OLED。

Regarding your question about the CapEx breakdown per the different products, now actually we are still -- we have not completed our investment review regarding the large-size OLED and the small- to medium-size OLED and so forth. So we will have to share this with you in the first quarter of next year.

關於你問的關於不同產品的資本支出細分的問題，實際上我們現在還沒有完成對大尺寸OLED和中小尺寸OLED等的投資審查。因此，我們必須在明年第一季與您分享這一點。

(interpreted) Our next question is from JJ Park at JP Morgan, please ask your question.

（翻譯）我們的下一個問題來自摩根大通的 JJ Park，請提出您的問題。

(interpreted) Now my question is first about the plastic OLED, so I would like to know about your plans for ramp-up and the total capacity for E5 and E6. Then for the LTPS line, it seems as if the utilization rate is going to be reduced, so I'm just wondering how this is going to be utilized going forward. Afterwards I have some follow-up questions about the large-size panels.

（解釋）現在我的問題首先是關於塑膠OLED，所以我想了解你們的產能計畫以及E5和E6的總產能。那麼對於LTPS線來說，利用率似乎會降低，所以我只是想知道接下來如何利用它。之後我還有一些關於大尺寸面板的後續問題。

(interpreted) Now first about the investment in P-OLED, now actually there is some public disclosure made after the BOD approval at the Company. Now for the E51, now this is going to go into mass production in the first half of next year with a capacity of 7500 per month. Then for E5-2, now this is planned for mass production in the first half of 2018 and again that's for 7500 per month.

（解讀）現在首先是關於P-OLED的投資，現在公司董事會批准後實際上有一些公開披露。至於E51，明年上半年將進入量產，產能每月7,500輛。然後是 E5-2，目前計劃在 2018 年上半年量產，每月產量為 7500 個。

Per our disclosure in July this year, there is already investment under way for a fab E61 with a capacity of 15,000. Let me clarify about the E51 and E52, now the investment here for the plastic OLED, in this case this is a conversion of the existing facilities. So we are converting some of the existing LTPS facilities for the plastic OLED investment.

根據我們今年 7 月的揭露，產能為 15,000 片的 E61 晶圓廠的投資已經在進行中。讓我澄清一下E51和E52，現在這裡對塑膠OLED的投資，在這種情況下，這是對現有設施的改造。因此，我們正在將一些現有的 LTPS 設施轉變為塑膠 OLED 投資。

Now our strategy for the investment is that for the existing LTPS lines, we are going to switch some of them to plastic OLED depending on the market demand. Now having said that, of course the pace would have to largely depend on the demand coming from the market. So as long as there is demand for LTPS LCD remaining in the market, then of course we will have to pace our speed of the conversion accordingly. As to your question on how we are going to utilize the remaining capacity for LTPS, our plan is to use this to expand our business with other customers.

現在我們的投資策略是，對於現有的LTPS生產線，我們將根據市場需求將其中一些生產線轉為塑膠OLED。話雖如此，當然，速度很大程度上取決於市場的需求。因此，只要市場上仍然存在對 LTPS LCD 的需求，那麼我們當然就必須相應地調整轉換速度。至於您提出的關於我們將如何利用 LTPS 剩餘產能的問題，我們的計劃是利用它來擴展我們與其他客戶的業務。

(interpreted) Thank you for that. Now my second question is, you also touched upon this in your presentation, but now we see that the existing companies, now many of them are phasing out the large-size LCD, and likewise for Gen X. So I wonder what the plan is for LG Display?

（解釋）謝謝你。現在我的第二個問題是，您在演講中也談到了這一點，但現在我們看到現有的公司，現在很多公司都在逐步淘汰大尺寸LCD，X 代也是如此。所以我想知道計劃是什麼LG顯示器？

(interpreted) Now I'm sure you already know that the LG Display strategy for securing capacity for OLED TV and plastic OLED is to convert the capacity from the existing LCD lines. So we will try to reduce the LCD capacity, as we try to build up the OLED business as well as the capacity. So our fab strategy basically is to convert the LCD capacity for our OLED fab for mass production.

（解釋）現在我相信您已經知道，LG Display 確保 OLED 電視和塑膠 OLED 產能的策略是轉換現有 LCD 生產線的產能。因此，我們將努力減少 LCD 產能，同時努力建立 OLED 業務和產能。因此，我們的晶圓廠策略基本上是將 LCD 產能轉換為 OLED 晶圓廠進行量產。

(interpreted) Our next question is from Peter Yu at BNP Paribas, please ask your question.

（翻譯）我們的下一個問題來自法國巴黎銀行的Peter Yu，請問您的問題。

(interpreted) Now my question is about -- well, in your presentation you talked about the LCD market going to improve next year, and also that the OLED large-size panel is also going to see improvements. So it seems as if, just looking at that scenario, this presents a very good picture for LG Display.

（解釋）現在我的問題是——嗯，在您的演講中，您談到明年 LCD 市場將會改善，而且 OLED 大尺寸面板也會看到改善。因此，僅從這個場景來看，這似乎為 LG Display 呈現了一幅非常好的畫面。

But then I actually have a concern, and that is in particular regarding the Chinese companies. We see that they are ramping up their capacity and also for the Gen 11 as well. So for the Chinese companies, so far they have been focusing mostly on the small size, like 32-inch or below. So, so far there was no competition coming from then in the large-size panels.

但我實際上有一個擔憂，尤其是關於中國公司。我們看到他們正在提高產能，第 11 代也是如此。所以對於中國公司來說，到目前為止他們主要關注的是小尺寸，例如32吋或以下。因此，到目前為止，大尺寸面板還沒有出現競爭。

But then they are on a learning curve, so they're gradually moving into larger sizes, like 40-inch and 50-inch. And, in the future, eventually they might also go into, for Gen 11, 60-inch and above. So in such a case, there is also the risk that this could actually eat away at the profitability of the large-size panels, which is a very big strength of LG Display.

但隨後它們就處於學習曲線上，因此它們逐漸轉向更大的尺寸，例如 40 英寸和 50 英寸。而且，在未來，最終他們也可能會進入第 11 代、60 英寸及以上。因此，在這種情況下，還存在實際上可能侵蝕大尺寸面板獲利能力的風險，而大尺寸面板是 LG Display 的一大優勢。

So now my question is then, do you believe that there is the likelihood of the LCD market worsening before your OLED mix improves for the LG Display? So I wonder what your take is on the overall competition?

那麼現在我的問題是，您是否認為在 LG Display 的 OLED 組合改善之前 LCD 市場可能會惡化？那我想知道您對整場比賽有何看法？

(interpreted) Now I am from the market intelligence division and I would like to take and answer your questions in several parts. Now, first, it is correct that the Chinese companies are planning for size migration. So up until now, their dominant product is 32-inch, which is taking over 70%, and for the next year or two it will remain at around 60% to 70%. But then, going forward, yes it's likely that they are going to increase their size to 50-inch or even larger.

（口譯）我現在是市場情報部門的，我想分成幾個部分回答大家的問題。首先，中國企業正在規劃規模遷移，這是正確的。所以到目前為止，他們的主導產品是32英寸，佔比超過70%，未來一兩年將維持在60%到70%左右。但展望未來，他們很可能會將尺寸增加到 50 英寸甚至更大。

So, in the meantime, we do believe that we will be able to secure sufficient profitability in the high-end zone where we are still enjoying the dominant position, such as the IPS, M-plus and 4K.

因此，與此同時，我們確實相信我們將能夠在我們仍然享有主導地位的高端領域中獲得足夠的盈利能力，例如IPS、M-plus和4K。

Then in the second half of 2018 or 2019, when the Gen 10 will be coming in, of course we will keep upgrading our large-size infrastructure at the LCD fab for a Gen 8 or a Gen 7. Then we believe that we will be able to maintain a sizeable gap in the high-end zone, using 8K or M-plus.

然後在 2018 年下半年或 2019 年，當 Gen 10 到來時，我們當然會繼續升級 LCD 工廠的大尺寸基礎設施，以實現 Gen 8 或 Gen 7。然後我們相信我們會使用8K 或M-plus 能夠在高端區域保持相當大的差距。

Now later on when the Gen 10 comes in, then perhaps the competition might intensify. But then around that time, perhaps there is going to be another round of restructuring that we have seen this year. So in such a case, then there would be some going up, some going down. So at that time, perhaps the oversupply is not going to be at such a serious extent as we might be concerned today.

現在，當 Gen 10 到來時，競爭可能會加劇。但到那時，也許會出現我們今年看到的另一輪重組。所以在這種情況下，就會有一些上漲，一些下跌。所以到時候，或許供給過剩不會像我們今天擔心的那麼嚴重。

Then as the CFO has already explained, LG Display's strategy is to focus more on OLED going forward to 2019 or 2020. So by structure we are actually trying to move away from LCD commoditization. So, in the meantime, we will keep our competition in the high-end LCD, so we believe that we are in a very good position to enjoy good competition in the future environment.

正如財務長已經解釋的那樣，LG Display 的策略是在 2019 年或 2020 年更專注於 OLED。因此，從結構上看，我們實際上正在嘗試擺脫 LCD 商品化。因此，與此同時，我們將保持在高端液晶顯示器方面的競爭，因此我們相信我們處於非常有利的位置，可以在未來的環境中享受良好的競爭。

(interpreted) Our next question is from Rob Stone at Cowen and Company, please ask your question.

（解釋）我們的下一個問題來自 Cowen and Company 的 Rob Stone，請提出您的問題。

Hi, I have two questions please. The first one is, if you could provide any more color on the OLED business? Particularly what percent of your revenue came from OLED in Q3, the mix of your TV panels regarding 55-, 65- and 77-inch sizes, and how you see the ASP trend in the general TV market impacting your OLED business. That's my first question, thanks.

你好，我有兩個問題請教。第一個是，能否在OLED業務上提供更多的色彩？特別是第三季度您的收入中有多少百分比來自 OLED，您的電視面板尺寸為 55 英寸、65 英寸和 77 英寸，以及您如何看待整個電視市場的平均售價趨勢對您的 OLED 業務的影響。這是我的第一個問題，謝謝。

(interpreted) Now first about the OLED panel profitability, please understand that it will be difficult for us to give out the profitability per inch. But now, as we have explained in the earlier part of this year, within this year we were intending to turn around to the black with the EBITDA for the OLED panel. And for next year we plan to maintain the EBITDA in the black throughout the year and keep improving the profitability, so that by 2019 our target is to see operating profit in OLED panel.

（解讀）首先是關於OLED面板的獲利能力，請理解，我們很難給出每英吋的獲利能力。但現在，正如我們在今年早些時候解釋的那樣，我們打算在今年內透過 OLED 面板的 EBITDA 扭虧為盈。明年我們計劃維持全年EBITDA獲利，不斷提高獲利能力，到2019年我們的目標是OLED面板實現營業利潤。

As for the percentage out of the total TV panels, for the year it seems that the OLED panel, our of the total TV panel, is slightly under 10%. Also the 55-inch, out of the overall OLED TV panels, this year's projection is 70%. And for next year we expect the share of 65-inch to go up.

至於佔電視面板總量的百分比，今年以來，OLED面板（我們的電視面板總量）似乎略低於10%。另外，55吋在整體OLED電視面板中，今年的佔比為70%。明年我們預計 65 英寸的份額將會上升。

So my second question was going to be regarding other market segments for OLED technology. You mentioned your expansion plans for TV and the ramp of the first two plastic OLED lines. I wonder if you could comment on how you see customer demand for other applications, such as automotive plastic OLED panels and also OLED lighting panels, thank you.

所以我的第二個問題是關於 OLED 技術的其他細分市場。您提到了電視的擴張計劃以及前兩條塑膠 OLED 生產線的擴建計劃。我想知道您是否可以評論您如何看待客戶對其他應用的需求，例如汽車塑膠 OLED 面板和 OLED 照明面板，謝謝。

(interpreted) Now I'm sure you understand that you actually touched upon the very reason why the Company has chosen OLED panel as our strategic path forward. Now because it has very good applicability beyond IT products, like monitors or even television, so the features and the characteristics of the OLED product and the technology make them very much scalable to other applications like automotive or commercial. That is why we have chosen this as our next generation business.

（解釋）現在我相信您已經明白您實際上談到了公司選擇OLED面板作為我們的策略發展道路的原因。現在，由於它在 IT 產品（如顯示器甚至電視）之外具有非常好的適用性，因此 OLED 產品和技術的功能和特性使它們可以很好地擴展到汽車或商業等其他應用。這就是為什麼我們選擇它作為我們的下一代業務。

So using the flexibility of the dynamic form of OLED, we are trying to discover new business opportunities in various fields. So, for example in the automotive sector, already there is collaboration underway with a number of companies. Then also in the realm of VR which is a hot field these days, now there are a lot of companies that are mulling the possibility of adopting plastic OLED for their products.

因此，利用OLED動態形式的靈活性，我們正在嘗試在各個領域發現新的商機。例如，在汽車領域，已經與許多公司進行了合作。此外，在目前熱門的 VR 領域，現在有許多公司正在考慮在其產品中採用塑膠 OLED 的可能性。

Then what I mentioned earlier about the commercial applications, so also it's going beyond the public signage. So, for example in the fields of broadcasting and medical, we are already collaborating with some of the companies for development.

然後我之前提到了商業應用，所以它也超出了公共標誌的範圍。因此，例如在廣播和醫療領域，我們已經與一些公司合作開發。

Then also for the lighting that you have mentioned, the OLED lighting, now after acquiring this business, actually we decided to acquire this business because we thought that this is a field where we can also utilize many of the strengths of the OLED application. So we are going to specifically define the direction of this business going forward and implement the strategy accordingly.

然後還有你提到的照明，OLED照明，現在在收購這個業務之後，實際上我們決定收購這個業務，因為我們認為這是一個我們也可以利用OLED應用的許多優勢的領域。因此，我們將具體確定這項業務的未來發展方向，並據此實施策略。

(interpreted) Our next question is from [Andy Abram] at [SCML].

（已解釋）我們的下一個問題來自 [SCML] 的 [Andy Abram]。

Thank you for taking my questions. First, I was wondering if you could give us an idea how much of your LCD capacity will be converted in 2017 and are you looking for a one for one for every square meter that you reduce LCD, will that convert into a square meters of OLED or do you have a ratio in mind?

感謝您回答我的問題。首先，我想知道您是否可以告訴我們，2017 年您的 LCD 產能將轉換為多少？您是否正在為每減少一平方米的 LCD 尋找一一對應，將其轉換為一平方米的 OLED或者您心裡有一個比例嗎？

(interpreted) Well, I can give you a very simple example as a way of answering this question. So now, for next year, with the E42 mass production of the OLED TV panel, we are going to convert 50,000 capacity out of LCD, for 26,000 of OLED.

（解釋）好吧，我可以給你一個非常簡單的例子來回答這個問題。因此，現在，明年，隨著 OLED 電視面板 E42 的量產，我們將把 50,000 個 LCD 產能轉換為 26,000 個 OLED。

You could do the math using this ratio.

您可以使用這個比率進行數學計算。

(interpreted) Our next question is from Kyung Min Kim, Daishin Securities.

（解釋）我們的下一個問題來自大信證券的 Kyung Min Kim。

(interpreted) I have two questions and I will ask the second question as a follow up to the first one.

（已解釋）我有兩個問題，我將提出第二個問題作為第一個問題的後續問題。

The first question is about your guidance for the Q4 area shipment, you mentioned that it is going to be almost flat. But then my understanding is that traditionally, October and November, they have a positive seasonality so usually, the area of shipment would increase. So I wonder why your guidance is to be more or less flat?

第一個問題是關於您對第四季度地區出貨量的指導，您提到它將幾乎持平。但我的理解是，傳統上，十月和十一月，它們有積極的季節性，所以通常裝運面積會增加。所以我想知道為什麼你的指導或多或少是平的？

(interpreted) Well, yes, the guidance for the area shipment to be flat in the Q4 or quarter-on-quarter, now that is because of the capacity which is going to be remaining unchanged quarter-on-quarter.

（解釋）嗯，是的，第四季度或環比地區出貨量的指導將持平，這是因為產能將環比保持不變。

So as we have explained earlier, the LCD capacity will be converted to OLED and also, there is also the continued size migration into larger panels.

正如我們之前所解釋的，LCD 產能將轉換為 OLED，尺寸也會持續遷移到更大的面板。

Please ask your second question.

請問你的第二個問題。

(interpreted) The next question is simply about your non-operating income. Because you did not give out any comments about that in your presentation so if you could shed light on that.

（解釋）下一個問題只是關於您的營業外收入。因為您在演講中沒有對此發表任何評論，所以您是否可以闡明這一點。

(interpreted) Now, there was non-operating expense in Q3 and mostly because of the exchange rate. So as I have explained earlier in my presentation, there was a movement of KRW44 in the exchange rate and our positioning is that we actually have more assets in foreign currency than liabilities in foreign currency and that is why there has been some transaction loss via exchange rate transaction loss.

（解釋）現在，第三季有營業外支出，主要是因為匯率。正如我之前在演講中所解釋的，匯率出現了 44 韓元的波動，我們的定位是，我們實際上擁有的外幣資產多於外幣負債，這就是為什麼透過兌換產生了一些交易損失率交易損失。

(interpreted) Simon Wu, Bank of America Merrill Lynch.

（口譯）Simon Wu，美銀美林。

(interpreted) My question is about the percentage of OLED TV production, the OLED TV panels production. So now, I believe that LG's biggest strengths are differentiated and more premium OLED TV and especially the larger sizes.

（解釋）我的問題是關於OLED電視產量的百分比，也就是OLED電視面板的產量。所以現在，我認為 LG 最大的優勢是差異化和更優質的 OLED 電視，尤其是更大的尺寸。

I wonder when the 65-inch and 77-inch are going to surpass 55-inch in which quarter, so more specifically, the 65-inch, when do you think that this is going to surpass the 55-inch share? And also, now currently, the 65-inch OLED TV retail price is about 5,000 to 6,000 dollars (sic - currency unit not specified) and fourth quarter the 65-inch LCD, it is in the high 1,000 dollar (sic - currency unit not specified) range. So you see that there is almost like a three-fold price difference between these product groups.

我想知道65英寸和77英寸哪個季度會超過55英寸，更具體地說，65英寸，你認為什麼時候會超過55英寸份額？而且，目前65吋OLED電視零售價約為5,000至6,000美元（原文未指定貨幣單位），而第四季65吋LCD則處於1,000美元（原文未指定貨幣單位）的高位。指定）範圍。所以你會發現這些產品組之間的價格差異幾乎是三倍。

Do you believe that such a price gap is going to be maintained?

您認為這樣的價格差距會持續下去嗎？

(interpreted) Basically with OLED, our strategy is now compared to LCD, we are going to keep differentiating our product and also maintain a price premium.

（解釋）基本上，對於OLED，我們的策略現在是與LCD相比，我們將繼續使我們的產品與眾不同，並保持價格溢價。

An analysis into the OLED TV sales trend in 2016 also shows us that such premium strategy has worked quite well for us. Now from the customer side, looking at the demand coming from the market, it seems as if there is a trend underway for a size migration, for example, moving from 55 inch to 65 inch or larger.

對2016年OLED電視銷售趨勢的分析也表明，這種溢價策略對我們來說效果很好。現在從客戶方面來看，從市場的需求來看，似乎有一種尺寸遷移的趨勢，例如從55英寸轉向65英寸或更大。

Generally-speaking, currently the share of 65-inch and larger is about 40% and we believe that this percentage will keep climbing up. But then, this is also subject to change by region as well as the differences in the demand.

整體來看，目前65吋以上的佔比約為40%，我們相信這一比例還會繼續攀升。但是，這也會因地區以及需求的差異而改變。

From the perspective of the panel makers, changes in the demand for the different sizes, now they would also have a lot of implications for our own fab mix as well as our productivity so this also has a direct bearing on our next generation investment.

從面板製造商的角度來看，不同尺寸的需求發生變化，現在它們也會對我們自己的晶圓廠組合以及我們的生產力產生許多影響，因此這也對我們的下一代投資有直接影響。

So for next year, now based on our increased capacity, there is going to be even more customers joining in from different regions so we would have to wait and see until we make our decisions about the investment and productivity.

因此，明年，基於我們產能的增加，將會有更多來自不同地區的客戶加入，因此我們必須拭目以待，直到我們做出有關投資和生產力的決定。

(interpreted) Because of the time constraint, this shall be the last question.

（解釋）由於時間有限，這是最後一個問題。

(interpreted) Our next question is from [Hyun Cheoul Soh], (SCNS) investment.

（解釋）我們的下一個問題來自[Hyun Cheoul Soh]，（SCNS）投資。

(interpreted) I believe that one of the biggest concerns in the market continues to be China, the Chinese players. It seems as if these days, there are moves among the Chinese players to increase investment into flexible OLED. So now then, from the Company's point of view, do you believe that such a strategic direction by the Chinese players these days will be a risk factor for your own OLED business?

（解釋）我相信市場上最大的擔憂之一仍然是中國，中國的玩家。最近，中國廠商似乎有加大對柔性OLED投資的舉動。那麼現在，從公司的角度來看，您認為中國企業目前的這種策略方向會對您自己的OLED業務構成風險因素嗎？

(interpreted) This is Young Kwon Song from the Strategy and Marketing Group responding to your question.

（翻譯）我是策略和行銷組的 Young Kwon Song，正在回答您的問題。

Yes, as you have just observed, it seems true that the Chinese players are increasingly investing more into flexible, especially plastic OLED.

是的，正如您剛才所觀察到的，中國企業似乎確實越來越多地投資於柔性OLED，尤其是塑膠OLED。

The sheer increase in capacity might be cause for concern, but then, in order to reach a certain level of technological quality for plastic OLED, you actually need quite a big amount of infrastructure.

產能的大幅成長可能會引起人們的擔憂，但為了使塑膠 OLED 達到一定的技術品質水平，實際上需要相當大量的基礎設施。

In fact, this is something that requires a total package, so for example, the patent, human resources, ecosystem, and the process technologies, so because of this, we believe that we still have time to maintain our differentiation and maintain our competitiveness.

其實這個是需要一個整體的東西，比如說專利、人力資源、生態系統、製程技術，所以我們相信我們還有時間去維持我們的差異化，保持我們的競爭力。

(interpreted) Thank you very much for the very good questions and we will now close Q3 2016 earnings conference call. Thank you once again for joining us today.

（已翻譯）非常感謝您提出的好問題，我們現在將結束 2016 年第三季財報電話會議。再次感謝您今天加入我們。

Please do contact us at the IR team for any additional questions. Thank you.

如有任何其他問題，請聯絡我們的 IR 團隊。謝謝。

(interpreted) Closing the conference, we kindly ask you to fill out the survey if you are connected to the online webcast. Thank you, all, for attending. You may disconnect now.

（翻譯）在會議結束時，如果您連接到線上網路廣播，我們懇請您填寫問卷。謝謝大家的出席。您現在可以斷開連線。

Statements in English on this transcript were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.

本筆錄中的英語陳述是由現場通話中的口譯員說出的。口譯員由贊助本次活動的公司提供。