Intrinsic value of LG Display ADR - LPL

Previous Close

$13.18

  Intrinsic Value

$15.74

stock screener

  Rating & Target

hold

+19%

  Value-price divergence*

+5000%

Previous close

$13.18

 
Intrinsic value

$15.74

 
Up/down potential

+19%

 
Rating

hold

 
Value-price divergence*

+5000%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of LPL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 9.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -6.62
  17.90
  16.61
  15.45
  14.40
  13.46
  12.62
  11.86
  11.17
  10.55
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.68
  5.61
Revenue, $m
  22,871
  26,965
  31,444
  36,302
  41,530
  47,122
  53,067
  59,359
  65,989
  72,953
  80,247
  87,869
  95,819
  104,101
  112,720
  121,682
  130,998
  140,680
  150,740
  161,196
  172,064
  183,366
  195,123
  207,358
  220,096
  233,366
  247,195
  261,615
  276,659
  292,359
  308,754
Variable operating expenses, $m
 
  24,078
  28,076
  32,412
  37,079
  42,070
  47,377
  52,992
  58,911
  65,126
  71,637
  78,430
  85,527
  92,919
  100,612
  108,612
  116,927
  125,568
  134,548
  143,881
  153,582
  163,670
  174,164
  185,084
  196,455
  208,299
  220,643
  233,514
  246,941
  260,955
  275,589
Fixed operating expenses, $m
 
  1,393
  1,428
  1,463
  1,500
  1,538
  1,576
  1,615
  1,656
  1,697
  1,740
  1,783
  1,828
  1,873
  1,920
  1,968
  2,017
  2,068
  2,120
  2,173
  2,227
  2,283
  2,340
  2,398
  2,458
  2,520
  2,582
  2,647
  2,713
  2,781
  2,851
Total operating expenses, $m
  21,758
  25,471
  29,504
  33,875
  38,579
  43,608
  48,953
  54,607
  60,567
  66,823
  73,377
  80,213
  87,355
  94,792
  102,532
  110,580
  118,944
  127,636
  136,668
  146,054
  155,809
  165,953
  176,504
  187,482
  198,913
  210,819
  223,225
  236,161
  249,654
  263,736
  278,440
Operating income, $m
  1,113
  1,494
  1,940
  2,426
  2,951
  3,515
  4,115
  4,751
  5,423
  6,130
  6,871
  7,655
  8,465
  9,309
  10,188
  11,102
  12,054
  13,043
  14,072
  15,142
  16,255
  17,414
  18,620
  19,875
  21,184
  22,548
  23,970
  25,454
  27,004
  28,623
  30,314
EBITDA, $m
  3,720
  2,730
  3,380
  4,088
  4,851
  5,668
  6,539
  7,461
  8,435
  9,458
  10,531
  11,653
  12,825
  14,045
  15,316
  16,639
  18,014
  19,444
  20,931
  22,477
  24,084
  25,757
  27,498
  29,310
  31,198
  33,166
  35,217
  37,358
  39,592
  41,925
  44,363
Interest expense (income), $m
  108
  124
  185
  251
  323
  401
  484
  573
  666
  765
  868
  976
  1,090
  1,208
  1,331
  1,459
  1,592
  1,730
  1,874
  2,024
  2,179
  2,341
  2,508
  2,683
  2,865
  3,054
  3,251
  3,457
  3,671
  3,895
  4,128
Earnings before tax, $m
  1,136
  1,370
  1,756
  2,175
  2,628
  3,113
  3,631
  4,179
  4,757
  5,365
  6,003
  6,679
  7,375
  8,101
  8,857
  9,643
  10,462
  11,313
  12,198
  13,119
  14,076
  15,073
  16,111
  17,192
  18,319
  19,493
  20,719
  21,998
  23,333
  24,728
  26,187
Tax expense, $m
  332
  370
  474
  587
  710
  841
  980
  1,128
  1,284
  1,449
  1,621
  1,803
  1,991
  2,187
  2,391
  2,604
  2,825
  3,054
  3,293
  3,542
  3,801
  4,070
  4,350
  4,642
  4,946
  5,263
  5,594
  5,939
  6,300
  6,677
  7,070
Net income, $m
  782
  1,000
  1,282
  1,588
  1,918
  2,273
  2,650
  3,050
  3,473
  3,917
  4,382
  4,876
  5,384
  5,914
  6,465
  7,040
  7,637
  8,258
  8,905
  9,577
  10,276
  11,003
  11,761
  12,550
  13,373
  14,230
  15,125
  16,058
  17,033
  18,052
  19,116

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,287
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  21,473
  22,622
  26,379
  30,454
  34,841
  39,532
  44,520
  49,798
  55,360
  61,202
  67,321
  73,715
  80,385
  87,333
  94,564
  102,082
  109,898
  118,020
  126,460
  135,231
  144,349
  153,831
  163,694
  173,958
  184,645
  195,777
  207,379
  219,476
  232,096
  245,268
  259,022
Adjusted assets (=assets-cash), $m
  19,186
  22,622
  26,379
  30,454
  34,841
  39,532
  44,520
  49,798
  55,360
  61,202
  67,321
  73,715
  80,385
  87,333
  94,564
  102,082
  109,898
  118,020
  126,460
  135,231
  144,349
  153,831
  163,694
  173,958
  184,645
  195,777
  207,379
  219,476
  232,096
  245,268
  259,022
Revenue / Adjusted assets
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
Average production assets, $m
  10,397
  12,269
  14,307
  16,517
  18,896
  21,440
  24,146
  27,008
  30,025
  33,194
  36,512
  39,980
  43,598
  47,366
  51,287
  55,365
  59,604
  64,009
  68,587
  73,344
  78,289
  83,432
  88,781
  94,348
  100,144
  106,181
  112,474
  119,035
  125,880
  133,023
  140,483
Working capital, $m
  2,956
  1,456
  1,698
  1,960
  2,243
  2,545
  2,866
  3,205
  3,563
  3,939
  4,333
  4,745
  5,174
  5,621
  6,087
  6,571
  7,074
  7,597
  8,140
  8,705
  9,291
  9,902
  10,537
  11,197
  11,885
  12,602
  13,349
  14,127
  14,940
  15,787
  16,673
Total debt, $m
  4,124
  5,278
  7,179
  9,241
  11,461
  13,834
  16,358
  19,029
  21,843
  24,799
  27,896
  31,131
  34,506
  38,022
  41,680
  45,485
  49,439
  53,549
  57,820
  62,258
  66,872
  71,669
  76,660
  81,854
  87,261
  92,894
  98,765
  104,886
  111,272
  117,937
  124,896
Total liabilities, $m
  10,293
  11,447
  13,348
  15,410
  17,630
  20,003
  22,527
  25,198
  28,012
  30,968
  34,065
  37,300
  40,675
  44,191
  47,849
  51,654
  55,608
  59,718
  63,989
  68,427
  73,041
  77,838
  82,829
  88,023
  93,430
  99,063
  104,934
  111,055
  117,441
  124,106
  131,065
Total equity, $m
  11,180
  11,175
  13,031
  15,044
  17,211
  19,529
  21,993
  24,600
  27,348
  30,234
  33,257
  36,415
  39,710
  43,143
  46,714
  50,429
  54,290
  58,302
  62,471
  66,804
  71,309
  75,992
  80,865
  85,935
  91,214
  96,714
  102,445
  108,421
  114,656
  121,162
  127,957
Total liabilities and equity, $m
  21,473
  22,622
  26,379
  30,454
  34,841
  39,532
  44,520
  49,798
  55,360
  61,202
  67,322
  73,715
  80,385
  87,334
  94,563
  102,083
  109,898
  118,020
  126,460
  135,231
  144,350
  153,830
  163,694
  173,958
  184,644
  195,777
  207,379
  219,476
  232,097
  245,268
  259,022
Debt-to-equity ratio
  0.369
  0.470
  0.550
  0.610
  0.670
  0.710
  0.740
  0.770
  0.800
  0.820
  0.840
  0.850
  0.870
  0.880
  0.890
  0.900
  0.910
  0.920
  0.930
  0.930
  0.940
  0.940
  0.950
  0.950
  0.960
  0.960
  0.960
  0.970
  0.970
  0.970
  0.980
Adjusted equity ratio
  0.469
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  782
  1,000
  1,282
  1,588
  1,918
  2,273
  2,650
  3,050
  3,473
  3,917
  4,382
  4,876
  5,384
  5,914
  6,465
  7,040
  7,637
  8,258
  8,905
  9,577
  10,276
  11,003
  11,761
  12,550
  13,373
  14,230
  15,125
  16,058
  17,033
  18,052
  19,116
Depreciation, amort., depletion, $m
  2,607
  1,236
  1,440
  1,661
  1,899
  2,154
  2,424
  2,710
  3,012
  3,329
  3,661
  3,998
  4,360
  4,737
  5,129
  5,537
  5,960
  6,401
  6,859
  7,334
  7,829
  8,343
  8,878
  9,435
  10,014
  10,618
  11,247
  11,904
  12,588
  13,302
  14,048
Funds from operations, $m
  2,183
  2,236
  2,722
  3,249
  3,818
  4,426
  5,074
  5,761
  6,485
  7,245
  8,043
  8,874
  9,744
  10,650
  11,594
  12,576
  13,598
  14,659
  15,763
  16,911
  18,105
  19,347
  20,639
  21,985
  23,387
  24,848
  26,372
  27,962
  29,621
  31,354
  33,164
Change in working capital, $m
  -959
  221
  242
  262
  282
  302
  321
  340
  358
  376
  394
  412
  429
  447
  465
  484
  503
  523
  543
  565
  587
  610
  635
  661
  688
  717
  747
  779
  812
  848
  885
Cash from operations, $m
  3,142
  2,015
  2,480
  2,987
  3,535
  4,124
  4,753
  5,421
  6,127
  6,869
  7,649
  8,462
  9,314
  10,203
  11,129
  12,092
  13,094
  14,137
  15,220
  16,346
  17,518
  18,736
  20,004
  21,324
  22,699
  24,132
  25,625
  27,183
  28,809
  30,506
  32,279
Maintenance CAPEX, $m
  0
  -1,040
  -1,227
  -1,431
  -1,652
  -1,890
  -2,144
  -2,415
  -2,701
  -3,003
  -3,319
  -3,651
  -3,998
  -4,360
  -4,737
  -5,129
  -5,537
  -5,960
  -6,401
  -6,859
  -7,334
  -7,829
  -8,343
  -8,878
  -9,435
  -10,014
  -10,618
  -11,247
  -11,904
  -12,588
  -13,302
New CAPEX, $m
  -3,573
  -1,872
  -2,038
  -2,210
  -2,379
  -2,544
  -2,705
  -2,863
  -3,017
  -3,169
  -3,319
  -3,468
  -3,617
  -3,768
  -3,921
  -4,078
  -4,239
  -4,405
  -4,578
  -4,757
  -4,945
  -5,142
  -5,349
  -5,567
  -5,796
  -6,038
  -6,292
  -6,561
  -6,845
  -7,144
  -7,459
Cash from investing activities, $m
  -2,752
  -2,912
  -3,265
  -3,641
  -4,031
  -4,434
  -4,849
  -5,278
  -5,718
  -6,172
  -6,638
  -7,119
  -7,615
  -8,128
  -8,658
  -9,207
  -9,776
  -10,365
  -10,979
  -11,616
  -12,279
  -12,971
  -13,692
  -14,445
  -15,231
  -16,052
  -16,910
  -17,808
  -18,749
  -19,732
  -20,761
Free cash flow, $m
  390
  -896
  -785
  -654
  -496
  -309
  -96
  144
  409
  698
  1,011
  1,343
  1,699
  2,075
  2,471
  2,886
  3,319
  3,771
  4,242
  4,730
  5,238
  5,765
  6,312
  6,879
  7,468
  8,080
  8,715
  9,375
  10,061
  10,774
  11,517
Issuance/(repayment) of debt, $m
  435
  1,731
  1,901
  2,062
  2,220
  2,374
  2,524
  2,671
  2,815
  2,956
  3,096
  3,235
  3,375
  3,516
  3,659
  3,805
  3,955
  4,110
  4,271
  4,438
  4,614
  4,798
  4,991
  5,194
  5,408
  5,633
  5,871
  6,121
  6,386
  6,665
  6,959
Issuance/(repurchase) of shares, $m
  0
  705
  575
  425
  249
  44
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  420
  2,436
  2,476
  2,487
  2,469
  2,418
  2,524
  2,671
  2,815
  2,956
  3,096
  3,235
  3,375
  3,516
  3,659
  3,805
  3,955
  4,110
  4,271
  4,438
  4,614
  4,798
  4,991
  5,194
  5,408
  5,633
  5,871
  6,121
  6,386
  6,665
  6,959
Total cash flow (excl. dividends), $m
  850
  1,539
  1,691
  1,833
  1,973
  2,109
  2,428
  2,814
  3,223
  3,654
  4,107
  4,578
  5,074
  5,591
  6,129
  6,690
  7,274
  7,881
  8,512
  9,169
  9,852
  10,563
  11,303
  12,073
  12,876
  13,713
  14,585
  15,496
  16,446
  17,439
  18,477
Retained Cash Flow (-), $m
  -658
  -1,705
  -1,856
  -2,013
  -2,167
  -2,317
  -2,464
  -2,607
  -2,748
  -2,886
  -3,023
  -3,159
  -3,295
  -3,432
  -3,572
  -3,714
  -3,861
  -4,012
  -4,169
  -4,333
  -4,504
  -4,684
  -4,872
  -5,070
  -5,279
  -5,499
  -5,731
  -5,976
  -6,234
  -6,507
  -6,794
Prev. year cash balance distribution, $m
 
  1,710
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,544
  -165
  -180
  -194
  -209
  -36
  207
  476
  768
  1,084
  1,420
  1,779
  2,158
  2,558
  2,976
  3,413
  3,869
  4,343
  4,836
  5,348
  5,879
  6,430
  7,003
  7,597
  8,213
  8,854
  9,520
  10,212
  10,932
  11,682
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  1,480
  -151
  -157
  -160
  -162
  -26
  140
  297
  441
  568
  674
  759
  821
  859
  874
  867
  842
  800
  745
  680
  608
  534
  459
  387
  320
  258
  204
  158
  119
  88
Current shareholders' claim on cash, %
  100
  91.8
  86.5
  83.2
  81.6
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4
  81.4

LG Display Co., Ltd. manufactures and sells thin film transistor liquid crystal display and organic light-emitting diode (OLED) technology-based panels in the Republic of Korea, the United States, Europe, and Asia. It offers various display panels primarily for use in televisions, notebook computers, desktop monitors, mobile phones, tablet computers, and mobile devices. The company also provides panels for industrial and other applications, including entertainment systems, automotive displays, portable navigation devices, and medical diagnostic equipment, as well as flexible display products. It serves end-brand customers and their system integrators through its subsidiaries and affiliated trading company, as well as directly. The company was formerly known as LG.Philips LCD Co., Ltd. and changed its name to LG Display Co., Ltd. in February 2008. LG Display Co., Ltd. was founded in 1985 and is headquartered in Seoul, South Korea.

FINANCIAL RATIOS  of  LG Display ADR (LPL)

Valuation Ratios
P/E Ratio 6
Price to Sales 0.2
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow 1.5
Price to Free Cash Flow -10.9
Growth Rates
Sales Growth Rate -6.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 55.7%
Cap. Spend. - 3 Yr. Gr. Rate 2.5%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 31.7%
Total Debt to Equity 36.9%
Interest Coverage 12
Management Effectiveness
Return On Assets 4.2%
Ret/ On Assets - 3 Yr. Avg. 4.5%
Return On Total Capital 5.3%
Ret/ On T. Cap. - 3 Yr. Avg. 5.8%
Return On Equity 7.2%
Return On Equity - 3 Yr. Avg. 7.9%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 14.1%
Gross Margin - 3 Yr. Avg. 14.6%
EBITDA Margin 16.8%
EBITDA Margin - 3 Yr. Avg. 17.6%
Operating Margin 4.9%
Oper. Margin - 3 Yr. Avg. 4.9%
Pre-Tax Margin 5%
Pre-Tax Margin - 3 Yr. Avg. 4.9%
Net Profit Margin 3.4%
Net Profit Margin - 3 Yr. Avg. 3.4%
Effective Tax Rate 29.2%
Eff/ Tax Rate - 3 Yr. Avg. 28%
Payout Ratio 19.7%

LPL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LPL stock intrinsic value calculation we used $22871 million for the last fiscal year's total revenue generated by LG Display ADR. The default revenue input number comes from 2016 income statement of LG Display ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our LPL stock valuation model: a) initial revenue growth rate of 17.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for LPL is calculated based on our internal credit rating of LG Display ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of LG Display ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of LPL stock the variable cost ratio is equal to 89.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1359 million in the base year in the intrinsic value calculation for LPL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for LG Display ADR.

Corporate tax rate of 27% is the nominal tax rate for LG Display ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the LPL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for LPL are equal to 45.5%.

Life of production assets of 10 years is the average useful life of capital assets used in LG Display ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for LPL is equal to 5.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $11180 million for LG Display ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 707.856 million for LG Display ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of LG Display ADR at the current share price and the inputted number of shares is $9.3 billion.

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COMPANY NEWS

▶ Asia markets open in the green   [Jul-25-17 09:00PM  CNBC Videos]
▶ Why LG Display Co. Stock Fell 11% Today   [Jul-20-17 04:11PM  Motley Fool]
▶ Q2 Earnings Preview: Stocks Expecting 50%-Plus Growth   [Jul-07-17 04:28PM  Investor's Business Daily]
▶ Top Ranked Value Stocks to Buy for June 16th   [Jun-16-17 11:46AM  Zacks]
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▶ Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks   [May-30-17 02:13PM  Investor's Business Daily]
▶ LG Needs a Smarter Bet Than OLED   [May-29-17 11:29PM  Bloomberg]
▶ ETFs with exposure to LG Display Co., Ltd. : May 26, 2017   [May-26-17 01:15PM  Capital Cube]
▶ LG Display posts 1Q profit   [May-15-17 03:32PM  Associated Press]
▶ New Strong Sell Stocks for April 28th   [Apr-28-17 09:41AM  Zacks]
▶ [$$] LG Display: shift screens   [Apr-26-17 09:14AM  Financial Times]
▶ Southeast Asia Steals Business as China Prices Itself Out   [Apr-18-17 11:00AM  TheStreet.com]
▶ Google Leak Promises Radical Pixel 2 Smartphone   [Apr-11-17 08:10PM  Forbes]
▶ China Set to Lead the World in Intellectual Property   [Mar-16-17 11:00AM  TheStreet.com]
▶ 3 Tech Stocks to Buy in March   [Mar-09-17 08:11AM  Motley Fool]
▶ 3 Tech Stocks to Buy in March   [08:11AM  at Motley Fool]
▶ [$$] Future Phones: Technology You Can See and Touch   [Feb-18-17 01:26AM  Barrons.com]
▶ Tale Of Two Types Of Quant Strategies   [Dec-12-16 05:44PM  at Forbes]
▶ [$$] iPhone Screen Makers Have a Blurry Future   [Dec-11-16 11:23PM  at The Wall Street Journal]
▶ Why LG Display Can Rally On   [Dec-07-16 06:57PM  at Barrons.com]
▶ How The Cooper Companies Inc (COO) Stacks Up Against Its Peers   [Dec-01-16 05:38PM  at Insider Monkey]
▶ [$$] Apple iPhone With Curved Screen Could Come as Soon as Next Year   [Nov-29-16 12:26AM  at The Wall Street Journal]
▶ [$$] Apple iPhone With Curved Screen Could Come as Soon as Next Year   [Nov-28-16 11:41AM  at The Wall Street Journal]
▶ 4 Stocks Shining In Apple's Ecosystem   [Sep-26-16 12:18PM  at Forbes]
▶ [$$] LG Display Is Up 46%: Take Profits   [Aug-06-16 12:01AM  at Barrons.com]
Stock chart of LPL Financial statements of LPL
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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