December 8, 2011
AMOLED (OVERWEIGHT)
Larger and flexible displays on the way
Sector
Update
WHAT’S THE STORY?
Event: AMOLED tablet PCs and TVs will hit the market next year, making
large and flexible AMOLED displays the new sector buzzwords.
Impact: Global supply of AMOLED panels is expected to expand 178% next
year and demand should jump 147%, mainly from Samsung Mobile Display,
top dog in the AMOLED device market.
ente
.yn.
alya
pslp
idsi
-ddelde
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www
Action: We add the AMOLED sector to our coverage, deeming several
players in the value chain worthy of attention, particularly materials maker
Duksan Hi-Metal, which should grow in tandem with AMOLED device
expansion next year, regardless of changes in panel makers’ process and
application technologies.
THE QUICK VIEW
JungHoon Chang
Analyst
[email protected]
822 2020 7752
„ AT A GLANCE
AMOLED supply-demand conditions to be tight in 2012: We expect an
AMOLED oversupply ratio of 5.7% next year—ie, tight supply-demand tightness given set
makers’ normal inventory levels. On the supply side, global production of AMOLED
panels should expand 147%, driven mainly by line startups at Samsung Mobile Display
(SMD)—namely its A2 (phase three), A3, and V1 lines. In addition, LG Display (LGD) is
considering ramping up its 8G pilot line. Taiwanese, Japanese and Chinese players are
showing signs of making AMOLED capex investments, but we expect little impact on next
year’s supply-demand dynamics.G
AMOLED tablet PCs and TVs to debut in 2012: Having been powered this year by
Samsung Electronics (SEC) phones, the AMOLED market should see renewed growth in
2012, as mobile-device makers increasingly move toward such displays, and following the
launch of the world’s first AMOLED tablet PC. Mass production of AMOLED TVs may
come as early as 2H12, given SEC and LGD’s commitment to launching such products.
AMOLED demand will likely jump 178% in 2012.G
Samsung SDI (006400 KS, KRW139,500)
KRW170,000(+21.9%)
Target price
Duksan Hi-Metal (077360 KQ, KRW27,250)
Shift to bigger and flexible panels ahead: Alongside the increasing adoption of
AMOLED panels in smartphones will come large AMOLED displays for TVs and flexible
displays for mobile devices—SMD has made notable progress in preparing for the latter.
Aggressive capacity expansion at the company’s 5.5G line and progress in developing large
AMOLED displays should clearly benefit related suppliers of equipment and materials.
We expect the unique characteristics of flexible displays (light, thin, and durable) to open
up new opportunities for mobile device manufacturers, consequently benefiting their
equipment and component suppliers.G
KRW36,000(+32.1%)
Target price
SFA Engineering (056190 KQ, KRW62,800)
Not rated
n/a
Target price
Wonik IPS (030530 KQ, KRW9,640)
Target price
t
Not rated
OVERWEIGHT on AMOLED sector: We add the AMOLED sector to our coverage,
as makers of such panels should next year begin seeing customer and application
diversification. The market for AMOLED products should consequently more than double
in size to KRW7.3t (from KRW3.5t in 2011). Many beneficiaries should emerge and a
variety of new technologies will undergo testing—eg, in the TFT backplane, color
deposition, and encapsulation processes.G
n/a
AP Systems (054620 KQ, KRW15,300)
Not rated
n/a
Target price
LTS (138690 KQ, KRW20,550)
Not rated
n/a
Target price
Advanced Nano Products
(121600 KQ, KRW18,950)
Not rated
n/a
Target price
Samsung Securities (Korea)
Duksan Hi-Metal our top pick: Among equipment makers, the biggest beneficiaries
of the AMOLED boom will be: 1) SFA Engineering, a strategic partner of SMD when it
comes to local sourcing of AMOLED-process-related equipment; and 2) AP Systems,
assuming that SMD opts for a laser-induced thermal imaging (LITI) process in its A3 line.
That said, delayed investments in A3 lines would weaken order momentum as well as
investor sentiment. Among materials makers, Duksan Hi-Metal stands out as it should
grow in tandem with AMOLED device expansion next year, regardless of changes in panel
makers' process and application technologies. Also poised to benefit are: 1) IGZO target
manufacturer Advanced Nano Products as oxide TFT backplanes are increasingly used
amid a trend toward larger panels; and 2) Samsung SDI amid rising demand for highcapacity batteries—major client SEC uses flexible AMOLED displays that allow room for
bigger batteries. Our top pick for 2012 is Duksan Hi-Metal.
www.samsungpop.com
December 8, 2011
AMOLED͑
„ CONTENTS
1. AMOLED industry overview
p2
2. Issues in 2012
p15
I. Price competitiveness of
AMOLED
p15
II. AMOLED panel evolution
p16
III. Changes in AMOLED value
chain
p17
3. Stock recommendations
p27
1. AMOLED industry overview
Supply-demand dynamics
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w.
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AMOLED supply outlook
Table 1. SMD’s mass production plan
Generation
Max Capacity 1Q11
1
2
1K
A1
1
Half4
27K
A1
2
Half4
14K
A1
3
Half4
48K
A2
1
Quarter5.5
96K
A2
2
Quarter5.5
192K
Quarter5.5
96K
Flex-1
5.5
24K
A3
Flex-2
5.5
48K
V1
1
6th G8
36K
V2
1
G8
30K
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
Source: Samsung Securities estimates
1) AMOLED supply to jump 147% in 2012
et
.n
3
A3
3Q11
ay
A2
2Q11
pl
Phase
R&D
is
Line
-d
ed
Several positive news flows have recently emerged from AMOLED equipment makers,
particularly SFA Engineering and AP Systems. The two firms have respectively signed
KRW69.1b and KRW26.1b contracts to supply Samsung Mobile Display (SMD) until endJanuary. Although details of the contracts cannot be revealed according to a nondisclosure agreement, the soon-to-be-delivered equipment will likely have a connection
with SMD’s phase-three A2 (A2P3) line, as the display maker has already purchased the
equipment needed for a phase-two A2 line that is ramping up now. According to analysis
by Display Search and Display Bank, the A2P3 line will each month produce 24,000
mother glasses for flexible displays, which should appear in mobile handsets and tablet
PCs from 2H12.
Controlling more than 90% of the current AMOLED market, SMD is taking the initiative
in terms of expansion. Its monthly capacity to produce 4.3-inch panels at 3.5G lines was
estimated at 4m units in 2010, but more than doubled to 15m units by end-3Q11 following
the startup of a phase-one A2 line (5.5G). We expect capacity to have more than tripled by
year-end to 18m, as a phase-two A2 line has been up and running since end-May.
2
December 8, 2011
AMOLED͑
Looking ahead to next year, SMD’s annual capacity should jump 147% to 2,596,000m2
next year (from 969,100m2 in 2011), driven by: 1) the 1H12 ramp-up of an A2P3 line; 2)
the start of an A3 line; and 3) the introduction of a V1 pilot line. We expect monthly
capacity to produce 4.3-inch displays for Galaxy S2 phones to reach 33m in 4Q12,
equating to 10m 7.7-inch displays for the Galaxy Tab, based on three assumptions: 1) that
the 3.5G A1 line will produce 44,500 per month, for use in mobile handsets and tablet PCs;
2) that the A2 line will fully ramp up to 96,000 units per month; and 3) that the A3 line
will produce 24,000 units per month. Without an A3 line ramp-up, SMD’s monthly
capacity for 4.3-inch panels would drop to an estimated 28.9m next year.
Table 2. Projected monthly phone display capacity at SMD, by line
(Million units/month)
Monthly capacity
A1
A2P1
A2P2
A2P3
Half 3.5G
Quarter 5.5G
Quarter 5.5G
Quarter 5.5G
96K
192K
96K
4”
4.6
7.2
14.4
7.2
GalaxyS2
4.3”
4.0
6.2
12.4
6.2
GalaxyS2 LTE
4.5”
3.6
5.7
11.4
5.7
GalaxyS2 HD LTE
4.65”
3.5
5.5
11.0
5.5
Galaxy Note
5.3”
2.6
4.0
8.0
4.0
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w.
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89K
Galaxy S
Note: Monthly capacity based on full ramp-up; assumes that cutting yield x yield = 70%
Source: Samsung Securities estimates
Table 3. Projected overall monthly phone display capacity at SMD (1Q12 vs 4Q12)
ed
(Million units/month)
Jan-Mar 2012
Oct-Dec 2012
(Lines A1+A2P1+A2P2)
(Lines A1+A2P1+A2P2+A2P3)
Galaxy S
33.4
28.9
GalaxyS2 LTE
20.7
26.4
GalaxyS2 HD LTE
20.0
25.5
14.6
18.7
Galaxy Note
is
-d
26.2
22.6
GalaxyS2
Note: Assumes full ramp-up of A2P2 in 1Q12, full ramp-up of A2P3 in 4Q12, and no ramp-up of A3
Source: Samsung Securities estimates
pl
Table 4. Projected monthly tablet PC display capacity at SMD, by line
(Million units/month)
Monthly capacity
A2P1
A2P2
A2P3
Half 3.5G
Quarter 5.5G
Quarter 5.5G
Quarter 5.5G
89K
96K
192K
96K
1.5
2.4
4.8
2.4
1.9
3.8
1.9
1.4
2.9
1.4
1.1
2.2
1.1
1.1
2.2
1.1
ay
A1
Galaxy Tab 7.7
7.7”
1.2
Galaxy Tab 8.9
8.9”
0.9
iPad
9.7”
0.7
Galaxy Tab 10.1
10.1”
0.7
et
7”
.n
Galaxy Tab
Note: Monthly capacity based on full ramp-up; assumes that cutting yield x yield = 70%
Source: Samsung Securities estimates
Table 5. Projected overall monthly tablet PC display capacity at SMD (1Q12 vs 4Q12)
(Million units//month)
Jan-Mar 2012
Oct-Dec 2012
(Lines A1+A2P1+A2P2)
(Lines A1+A2P1+A2P2+A2P3)
Galaxy Tab
8.6
11.0
Galaxy Tab 7.7
6.9
8.8
Galaxy Tab 8.9
5.2
6.6
iPad
4.1
5.2
Galaxy Tab 10.1
4.0
5.1
Note: Assumes full ramp-up of A2P2 in 1Q12, full ramp-up of A2P3 in 4Q12, and no ramp-up of A3
Source: Samsung Securities estimates
3
December 8, 2011
AMOLED͑
2) SMD
SMD recently issued KRW700b-worth of convertible bonds and unveiled a 2012 facility
investment plan involving more than KRW5t. Such an amount could double capacity at
the firm’s A2 lines, given the similar amount invested last year. SMD is unlikely to make
further investments in the mass production of TV-use panels, as its V1 line (with a
planned monthly capacity of 6,000 in 1Q12) will be able to produce AMOLED TV-use
panels.
Table 6. Recent strategic moves by Korean players in AMOLED market
Source
News
May 27
Electronics Times
Set up joint venture with Japan˅s Ube Kosan for polyimide production
May 31
SMD
Building completion ceremony for 5.5G A2 line
Jun 20
SFA
Signed a KRW45.3b contract to provide SMD AMOLED equipment
Jul 20
Yomiuri Online*
Licensed patents on IGZO TFT technology invented by Professor Hideo Hosono at Tokyo Institute of Technology
Aug 12
Financial News
Samsung Venture Investment has increased stake in blue fluorescent material maker SFC
Aug 22
SMD
Announced strategic alliance with UDC
Sep 1
SEC
Sep 6
Electronics Times
SMD!s 4-inch AMOLED panel production exceeds 10m/month
Sep 18
Electronics Times
SMD and LGD have developed a 55ˉ AMOLED TV panel prototype
Sep 29
Electronics Times
Oct 10
SFA
Ube Kosan announced USD9m investment in SUM˅s Tanjung factory, a JV between SMD and Ube Kosan.
SUM will start providing Samsung with polyimide materials in 1H12
Signed a KRW53b contract to supply AMOLED equipment to SMD
Oct 17
SEC
Nov 1
SFA
Nov 2
Electronics Times
SMD will reportedly start building its A3 fab as early as 1Q12
Nov 3
AP Systems
Signed a KRW26.2b contract to supply AMOLED equipment to SMD
ol
w.
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Date
Unveiled 5.3ˉ AMOLED mobile phone (Galaxy Note) and 7.7ˉ AMOLED tablet (Galaxy Tab 7.7) at IFA 2011 in Berlin
Sales of Galaxy S and Galaxy S2 exceed 30 million
ed
Signed a KRW69.2b contract to supply AMOLED equipment to SMD
Maeil Newspaper
Capex to exceed KRW5t in 2012, SMD to issue KRW1.5t worth of corporate bonds, KRW1t worth of rights next year
Nov 17
SMD
SMD issued KRW700b worth of unsecured bonds to fund AMOLED facility investments
-d
Nov 8
Electronics Times
SEC and LG Electronics are planning to disclose a 55" OLED TV at Jan 2012 CES
Nov 29
SMD
SMD posted KRW1.68t in 3Q11 revenue and KRW302.8 in profit, its highest ever
Nov 30
AP Systems
Signed a KRW20.5b contract to supply AMOLED equipment to SMD
Nov 30
Electronics Times
SEC!s equipment subsidiary Semes provided OLED equipment to SMD for the first time
Note: * Yomiuri Online story quoted by Yonhap News
Source: Company news, media reports, Samsung Securities
ay
3) LG Display
pl
is
Nov 20
et
4) Overseas players
.n
Having made investments in its 4.5G mother glass lines (17,000/month), LG Display will
likely focus on raising production yield at its 8G line (8,000/month). The result should
determine the firm’s investment decision regarding large-sized AMOLED panels.
Toshiba Mobile Display (TMD) scrapped its AMOLED mass-production plan in Oct 2010.
However, the CEO of Japan Display—a new company to be established in Apr 2012
following the integration of small- and medium-sized display businesses at Hitachi, Sony,
and Toshiba—said recently that the company would invest KRW1.5t in 6G lines (substrate
size 1500x1800), originally acquired from Panasonic to make LTPS-based small TFT-LCD
panels—it said it could possibly shift to AMOLED production in the future.
4
December 8, 2011
AMOLED͑
Chart 1. Japan Display’s shareholding structure
Tokki
100% share
Toshiba
Hitachi
100%
share
Canon
75%
share
Sony
25% share
(Planning to sell to
Hitachi)
Toshiba Mobile
Display
Hitachi Display
10%
share
10%
share
100%
share
Sony Mobile
Display
10%
share
Japan Display
ol
w.
ww
70%
share
Innovation Network Corporation of Japan (INCJ)
Note: Reuters reported on Nov 15 that Canon will sell its entire stake in Hitachi Display to Hitachi
Source: Company data, Samsung Securities
Taiwanese player AU Optronics last year acquired a 100% stake in AFPD (subsidiary of
TMD in Singapore), which has a monthly LTPS capacity of 15,000 units. Chinese firm
BOE is reportedly planning to invest USD3.5b in building 5.5G AMOLED lines.
is
-d
ed
We consider the moves by Taiwanese, Japanese, and Chinese players positive for the
AMOLED market, which has so far been dominated by SMD, for two reasons. First, the
market will be able to expand further and should not follow on the heels of the PDP
market, which was controlled by a few firms and quickly replaced by LCD. Second, the
proportion of AMOLED TVs should rise if economies of scale are achieved through the
production of larger-sized panels.
Table 7. AMOLED capacity trends and forecasts, by manufacturer
(000m2)
2009
2010E
2011E
2012E
2013E
2014E
SMD
2007
18.2
101.8
143.1
261.0
969.1
2596.0
4693.5
6525.9
LGD
1.6
8.3
16.4
26.5
72.8
306.8
391.2
393.2
0.5
0.5
0.5
1.5
8.0
45.8
81.8
81.8
0.5
0.5
0.5
0.5
0.5
18.6
49.7
62.7
Taiwan AUO
Japan
1.2
3.6
12.8
14.9
14.9
14.9
14.9
14.9
0.0
0.0
2.1
2.1
2.1
5.1
20.2
22.2
Sony
3.9
3.9
14.3
13.0
3.9
3.9
3.9
3.9
TMDisplay
0.5
0.5
0.1
0.0
1.0
25.2
32.2
32.2
BOE
0.0
0.0
0.0
0.0
26.3
119.1
189.8
319.4
Note: Based on input capacity
Source: Samsung Securities estimates
0.0
0.0
45.3
60.4
3,016.2
5,332.8
7,197.3
et
Total
CMEL
Panasonic
.n
China
ay
Chimei Innolux
2008
pl
Korea
1,072.3
By the end of this year, the world’s annual AMOLED production capacity is expected to
have risen 340% to 650,100m2, most of which can be attributed to SMD’s fully
operational A2 lines. Based on input capacity, SMD’s share of the supply market in 2011 is
estimated at 90% (vs 81% in 2010). Global capacity next year should depend on the
timing of A2P3 and A3 lines going live—we expect operations to start in 1H12 and 2H12,
respectively, and foresee annual capacity expansion of 250%.
G
5
December 8, 2011
AMOLED͑
AMOLED demand outlook
Demand expected to jump 178% in 2012
AMOLED panels are used in many applications, such as mobile handsets, MP3 players
and digital cameras. The proportion in handsets, based on area, is estimated to have been
87% in 2011, but should drop next year to around 70% as larger-sized panels emerge.
AMOLED demand beyond 2012 will depend on how many popular AMOLED tablet PCs
and TVs hit the market down the road.
Chart 2. AMOLED demand trends and forecasts, by application
('000m 2)
7,000
6,000
5,000
ol
w.
ww
4,000
3,000
2,000
1,000
0
2007
2008
2009
ed
Handset
2010
Tablet PC
2011E
Notebook
2012E
Monitor
2013E
TV
2014E
Other
Source: Samsung Securities estimates
-d
1) AMOLED handsets
pl
is
Shipments of AMOLED handsets should reach 82m this year (up from 38m in 2010), and
it would not be an exaggeration to say that most of such growth has come from SEC’s
Galaxy handsets. We see AMOLED handset shipments doubling next year to 168m, given
SEC’s solid marketing of AMOLED phones and moves by other mobile handset makers to
start using AMOLED displays in a big way.
ay
SEC said on Oct 17 that flagship smartphones Galaxy S and Galaxy S2 had notched up
total global sales of 30m units (20m and 10m, respectively). Launched in April, the Galaxy
S2 hit the 10m mark in just five months, sporting a WVGA (480x800) 4.3-inch screen.
Factoring in production yield and cutting loss ratio, 259 Galaxy S2 panels can be made
from a single AMOLED mother glass produced at a 5.5G line, suggesting that SMD’s 5.5G
A2 line (which started in April) and 3.5G A1 line (which produces 44,500 mother glasses
per month) together now have a 4.3-inch panel capacity of 18m units per month.
et
.n
With the exception of SEC, all handset makers gave up on the idea of using AMOLED
panels last year due to supply shortages and high prices. This year, however, they began
launching AMOLED phones amid improvements on the supply side. Motorola rolled out
4.3-inch AMOLED phone Droid RAZR in 2H11 while Kyocera and Dell are preparing to
launch AMOLED phones in December and January, respectively. Next year should be the
first in which AMOLED panels are commonly used by handset makers.
6
Jun 24, 2010
Launch date
Apr 28, 2011
Galaxy S II
121
4.0”
Super AMOLED
800 x 480
115.6 x 58.8 x 10.9 125.9 x 64.2 x 9.9
207 ppi
#Android v2.3
Gingerbread#
1,850
316 ppi
#Android v2.3
Gingerbread#
1,850
122
4.0” Super
AMOLED
800 x 480
252 ppi
233ppi
Microsoft Windows Bada v2.0
Phone 7.5 Mango
1,500
1,500
115.3
3.7” Super
AMOLED
800 x 480
132.7 x 68.8 x 9.5
130.6 x 69.6 x 9.5
Oct 2011
Oct 2011
S8600 Wave 3
Oct 27, 2011
Galaxy S II HD LTE Omnia W I8350
Sep 28, 2011
Galaxy S II LTE
121
135.5
140
4.3”Super AMOLED 4.5” Super AMOLED 4.65” Super
Plus
Plus
AMOLED
800 x 480
800 x 480
1280 x 720
233 ppi
217 ppi
#Android v2.1
#Android v2.3
Eclair#
Gingerbread#
Battery capacity 1,500
1,650
(mAh)
Source: GSM Arena, Samsung Securities
PPI
OS
Resolution
Weight (g)
Display
Dimensions (mm) 122.4 x 64.2 x 9.9 125.3 x 66.1 x 8.5
Galaxy S
Model
Image
Table 8. Recent SEC products with AMOLED screens
et
.n
AMOLED͑
ay
December 8, 2011
pl
is
-d
ed
Focus Flash I677
Focus S I937
110.6
4.3” Super
AMOLED Plus
800 x 480
126 x 66.8 x 8.5
Nov 2011
135
4.65” Super
AMOLED
1280 x 720
135.5 x 67.9 x 8.9
Nov 17, 2011 (UK)
Galaxy Nexus
285 ppi
#Android v2.3
Gingerbread#
2,500
178
5.3” Super
AMOLED
1280 x 800
Oct 29, 2011
(Germany)
146.9 x 83 x 9.7
Galaxy Note
252 ppi
217 ppi
316 ppi
Microsoft Windows Microsoft Windows #Android v4.0
Phone 7.5 Mango Phone 7.5 Mango Ice Cream Sandwich#
1,500
1,500
1,750
116.2
3.7” Super
AMOLED
800 x 480
116.1 x 58.7 x 11
Nov 2011
ol
w.
ww
196 ppi
#Android v3.2
Honeycomb#
5,100
335
7.7” Super
AMOLED Plus
1280 x 800
7
Dec 2011
(Expected)
196.7 x 133 x 7.9
Galaxy Tab 7.7
246 ppi
#Android 2.3v
Gingerbread#
1500
256 ppi
#Android v2.3
Gingerbread#
n/a
140
4.3” Super
AMOLED
960 x 540
Battery capacity
(mAh)
Source: GSM Arena, Samsung Securities
PPI
OS
Resolution
110
3.8” Ultra
AMOLED
800 x 400
Weight (g)
Display
HTC
Google Nexus
One
HTC
Droid Incredible
252 ppi
#Android v2.1
Eclair#
1,400
130
3.7”
AMOLED
800 x 480
Nov 2011
Nov 2011
Nokia
Lumia 800
Motorola
RAZR
Kyocera
Digno
127
4.3” Super
AMOLED
960 x 540
256 ppi
#Android v2.3
Gingerbread#
1,780
130
4.0” Super
AMOLED
800 x 480
233 ppi
#Android v2.3
Gingerbread#
n/a
130
3.7”
AMOLED
800 x 480
252 ppi
#Android v2.1
Eclair#
1,300
252 ppi
Microsoft Windows
Phone 7.5 Mango
1,450
116.5 x 61.2 x 12.1
142
3.7”
AMOLED
800 x 480
130.7 x 68.9 x 7.1
Dec 2011
expected (Japan)
128 x 65 x 8.7
Jan 2012
Jan 2010
Apr 2010
expected (Japan)
Dimensions (mm) 122.5 x 62.5 x 9.8 126 x 65 x 10.3 119 x 59.8 x 11.5 117.5 x 58.5 x 11.9
Dell
Streak Pro
101DL
et
.n
Sep 2011
LG
Optimus Soll
E730
ay
Launch date
Image
Manufacturer
Model
Table 9. Other recent products with AMOLED screens
pl
is
-d
AMOLED͑
ed
December 8, 2011
251 ppi
MeeGo OS, v1.2
Harmattan
1,450
135
3.9”
AMOLED
854 x 480
116.5 x 61.2 x 12.1
Sep 2011
Nokia
N9
ol
w.
ww
2,200
220 ppi
LiveArea
n/a
5”
AMOLED
960 x 540
Dec 2011
expected (Japan)
83.6 x 182 x 18.6
Sony
PlayStation Vita
700
138
3.5”
AMOLED
65.2 x 99 x 18.1
Sep 2011
Nikon
Coolpix S100
630
109
3.3”
AMOLED
8
54.4 x 92.9 x 13.2
Sep 2011
Sony
Cyber-shot TX55
December 8, 2011
AMOLED͑
2) AMOLED tablet PCs
Many AMOLED tablet PCs should hit the market in 2012. The question is whether
powerful and popular models will emerge, as was the case with mobile handsets. We
expect various models—with the 7.7-inch Galaxy Tab at the centre—to make their debut in
2012, and foresee total shipment volume of 4m units.
SEC hinted that tablet PCs would feature AMOLED panels when it disclosed the 7.7-inch
Galaxy Tab in September. One 5.5G mother glass can produce 81 AMOLED panels for the
7.7-inch Galaxy Tab (1,280 x 800 resolution) and 47 for the 9.7-inch iPad.
ol
w.
ww
By incorporating AMOLED panels, SEC has differentiated its tablet PCs from Apple’s. At
issue is whether Apple, a dominant player in the tablet PC market, will similarly adopt
AMOLED panels in iPads. As mentioned in our Sep 26 report, “AMOLED value chain
shifting,” AMOLED panels are sure to impress Apple, which now uses retina displays in
the iPhone. Compared to glass-based TFT-LCDs, plastic substrate-based AMOLED panels
are thin, light, and rugged—an ideal combination for use in mobile devices.
Table 10. AMOLED vs LCD comparisons between devices
Tablet PCs
iPad2
Width (mm)
13.4mm
8.8mm
Weight (g)
Display
730g
9.7" LCD
607g
9.7" LCD
Resolution
1024 x 768
PPI
132ppi
Image
Smartphones
Galaxy Tab 7.7
iPhone4S
Galaxy S
Galaxy S2
7.9mm
9.3mm
9.3mm
9.9mm
8.5mm
137g
3.5" LCD
140g
3.5" LCD
1024 x 768
335g
7.7" Super
AMOLED Plus
1280 x 800
960 x 640
960 x 640
121g
4.0" Super
AMOLED
800 x 480
121g
4.3" Super
AMOLED Plus
800 x 480
132ppi
196ppi
330ppi
330ppi
233 ppi
217 ppi
6800
5100
1420
1500
1650
Note: Galaxy Tab 7.7 has yet to be released
Source: GSM Arena, Samsung Securities
is
Battery capacity (mAh) 6600
-d
ed
iPhone4
pl
iPad1
1420
ay
et
.n
Following the success of its iPad1 and iPad 2, which have together achieved sales of 55m
units, Apple plans in 1Q12 to launch the iPad 3 and in 3Q12 a new 7-inch product
temporarily referred to as the iPad mini. The company is reportedly aiming to sell more
than 100m iPads in 2012, and plans to use higher-resolution IPS panels in the iPad3—
Sharp is trying to produce panels for iPads at its 8G fab, hoping to develop and mass
produce IGZO LCD panels for the iPad3. That said, Apple may yet decide to use flexible
panels in its next iPad models, if panel makers (such as SMD) can mass produce flexible
AMOLED panels and improve resolution. SMD could produce only 54m AMOLED panels
per year, even if its 5.5G line were fully used for tablet PC production.
9
December 8, 2011
AMOLED͑
3) AMOLED TVs
Next year should see Korea’s two leading TV makers—SEC and LGE—competitively roll
out AMOLED TVs. Annual shipments of such TVs should come in at 500,000 units or 0.2%
of flat TV shipments as a whole.
ol
w.
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Both SEC and LGE announced plans to roll out 55-inch AMOLED TVs at CES 2012, while
their respective AMOLED panel suppliers, SMD and LGD, have reportedly decided on
different panel-development methods. Assuming that SMD and LGD divide their 8G
mother glasses into six and two partitions, respectively, for evaporation, they should have
the same cutting efficiency in manufacturing 32-inch and 55-inch panels as those based
on a single mother glass. However, as manufacturing a 32-inch panel is less economical in
terms of price, entering a premium market with a 55-inch panel would offer more
advantages. Although it is too early to predict the popularity of AMOLED TVs, SEC and
LGE’s strong intention to introduce them before the 2012 London Olympic Games
suggests that consumers will not have long to wait.
Table 11. AMOLED TV panel development comparison
SMD
LG Display
2Q12
2Q12
Target model
55" TV
55" TV
EML structure
RGB
White OLED + Color filter
TFT substrate
Oxide or LTPS (non-laser)
Oxide TFT
Deposition method
SMS or LITI
FMM
Cutting method
6 partitions (2x3), 2 partitions (1x2), no cutting
2 partitions (1x2), no cutting
Encapsulation method
Metal, thin film
Metal
ed
Time
Source: Displaybank, Samsung Securities
-d
Table 12. Number of panels per mother glass, by panel size and cutting method
Generation
37”
40”
42”
2x2
1x2
1x1
(730x1,250)
(1,100x1,250)
(2,200x1,250)
(2,200x2,500)
18
12
18
18
6
8
8
12
6
8
8
10
6
8
8
8
6
8
6
8
6
4
6
6
pl
46”/47”
52”/55”
.n
Source: Displaybank, Samsung Securities
ay
TV panel size
32”
8.5G (2,200mm x 2,500mm)
3x2
is
Cutting method
et
The key issue for TV-use AMOLED panels is whether the TFT backplane will shift away
from the LTPS type (adopted mostly in small-panel lines) to the oxide type. Compared to
oxide TFT, the LTPS type is superior in electron mobility, but since TV-panel production
lines are currently based on a-Si, considerable investment will be needed for the
construction of new LTPS-based large-sized TV-panel fabsಧit notably costs much less to
convert an a-Si fab to an oxide TFT fab. Moves are being considered to switch backplane
to oxide TFT, which is more than 40 times superior to the a-Si type, but inferior to the
LTPS type—LGD is reportedly testing an oxide backplane in an 8G pilot line, but SMD
still doubts the reliability of oxide TFT backplanes in large panels.
10
December 8, 2011
AMOLED͑
Table 13. Comparison between TFT backplanes
a-Si TFT
Oxide TFT
Semiconductor
Polycrystalline Si
Amorphous Si
Amorphous IGZO
TFT uniformity
Poor
Good
Good
Channel mobility
~100່/Vs
1່/Vs
10-40༆/Vs
Reliability
Vth < 0.5V
Vth > 30V
Variation in Vth
TFTF type
PMOS (CMOS)
NMOS
NMOS
TFT mask steps
5-11
4-5
4-5
Cost / yield
High / Low
Low / High
Low / High
Process temperature
450-550 ୅
150-350 ୅
150-350 ୅
ol
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Poly-Si TFT
Source: DisplaySearch, Inha University, Samsung Securities
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is
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et
.n
11
Source: Samsung Securities
Other
Sony
20.1" OLED TV
SEC: 21" OLED TV
SEC: 40" OLED TV
(a-Si method)
Samsung SDI: 17" OLED panel
LG
2005
Company 2004
Table 14. OLED TVs: A history of development
2006
et
.n
AMOLED͑
11" OLED TV mass
production (XEL-1)
31" 3D OLED TV
(IFA 2010)
15" OLED TV mass
production (EL9500)
19" OLED TV
2011
SMD: 19" transparent
OLED display
2010
SMD: 19ˉ OLED TV
(ink-jet method)
2009
SMD: 30" 3D OLED TV
and prototypes of 14.1"
and 31" OLED TVs
2008
SDI: 40" OLED panel
(LTPS method)
SEC: 31" OLED TV
2007
SDI: 31" OLED panel
ay
December 8, 2011
pl
CMEL: 25" OLED TV
27" OLED TV
prototype
is
-d
AUO 14" OLED TV
21" OLED TV
prototype
ed
AUO 14" 3D OLED TV
AUO: 32" OLED TV at
FPD 2011 (Oxide TFT
method)
24.5" 3D OLED TV
Announced 24.5" glassdisclosed;
free 3D OLED TV
XEL-1 production halted prototype at CES 2011
(Feb)
ol
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Haier: 22" transparent
OLED TV at IFA 2011
(SMD —ˆ•Œ“)
Launched 25" and 17"
OLED monitors for
medical purposes
(Trimaster series)
12
Expected to disclose 55"
OLED TV prototype at
CES 2012
Expected to disclose 55"
OLED TV prototype at
CES 2012
2011 and beyond
December 8, 2011
AMOLED͑
Projected supply-demand conditions in 2012
The AMOLED panel oversupply ratio should come in at 19% this year, but fall to 5.7% in
2012 due to the aforementioned changes in supply-demand dynamics. Given that TV set
makers normally hold one month’s worth of inventory, an oversupply ratio of less than 8%
would indicate supply-demand tightness.
Supply-demand dynamics next year should be determined by two major factors: 1) SMD’s
A1 and A2 lines—its phase-two A2 line should be fully operational during the year and its
phase-three A2 line will go online in 2Q12; and 2) shipments of AMOLED smartphones
and tablet PCs. If SEC is the only buyer of AMOLED panels—as was the case this year and
as market concerns suggest—the market would be oversupplied based solely on SMD’s
production capacity. We believe, however, that other players will increasingly adopt
AMOLED panels, having witnessed SEC’s AMOLED phone competiveness.
ol
w.
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Earlier this year, we predicted that SMD would ramp its A2 line in 2012, and that the
proportion of AMOLED handsets made by phone makers other than SEC would reach 5%.
In fact, most of the ramp-up was done in 2011, and the proportion has remained at only
1%. The projected rise in glut ratio this year stems from a steady capacity ramp-up by
SMD, in preparation for demand growth in 2012. We expect tight supply next year, and
the shortage could worsen (assuming demand forecasts are unchanged) if production at
SMD’s A3 line is delayed beyond 3Q,
Chart 3. AMOLED panel glut ratio trends and projections (current vs previous)
ed
(%)
30
Oversupply
20
0
-d
10
8%
Shortage
(20)
(30)
(40)
(50)
2008
2009
2010
2011E
ay
2007
pl
is
(10)
This report
2013E
2014E
Jan 2011 report
.n
Source: Samsung Securities estimates
2012E
et
When AMOLED displays start featuring in tablet PCs and TVs will be key in terms of
overall AMOLED panel demand. AMOLED tablet PCs should hit the market next year, as
SEC tries to overtake Apple with devices boasting flexible displays and higher resolutions.
However, a decision by Apple to go with AMOLED panels for its new tablet PCs would
have the biggest impact on the industry. LED TVs have become the mainstay of the global
TV market, two years after their debut at CES 2009 and the start of mass production in
2H09. True, an LED TV was a far cry from the existing LCD TV and cost only 2-2.5 times
more—even now it has only a 20% price premium—suggesting perhaps that AMOLED
TVs may find it difficult to attain the same rapid rise in popularity. However, SEC and
LGE’s AMOLED TV product launches and ensuing mass production should have a
significant impact on supply-demand dynamics.
G
G
13
December 8, 2011
AMOLED͑
Chart 4. TV BLU trends (CCFL vs LED)
(%)
100
90
80
70
60
50
40
30
20
10
0
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
CCFL
2Q11
3Q11
LED
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Source: DisplaySearch, Samsung Securities
Chart 5. Effect of three production scenarios on glut ratio
(%)
25
20
15
ed
10
5
(5)
is
(10)
-d
0
2011E
2012E
Both A3 and V1 ramp up (base)
only A3 ramps up
Both do not ramp up
pl
Source: Samsung Securities estimates
ay
Chart 6. Effect of three demand scenarios on glut ratio
(%)
.n
25
20
et
15
10
5
0
(5)
2011E
2012E
SEC sells 3.1m AMOLED tablets (base)
SEC sells 1m AMOLED tablets
SEC sells 10m AMOLED tablets
Source: Samsung Securities estimates
G
G
G
14
December 8, 2011
AMOLED͑
„ CONTENTS
1. AMOLED industry overview
p2
2. Issues in 2012
p15
I. Price competitiveness of
AMOLED
p15
II. AMOLED panel evolution
p16
III. Changes in AMOLED value
chain
p17
3. Stock recommendations
p27
2. Issues in 2012
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I. Price competitiveness of
AMOLED
The proportion of smartphones worldwide stood at 24.9% at end-3Q, up from 18.7% at
end-2010. Looking ahead, AMOLED displays will likely be adopted in 25% of
smartphones, given the rising preference for handsets with large, high-resolution displays.
According to Display Search, AMOLED panel prices have jumped 45% over the past year
because SMD’s steady capacity expansion has fallen short of meeting demand while the
panels themselves have rapidly evolved in terms of size and resolution.
ed
Table 15. Mobile phone panel price trends
Panel type
AMOLED
4Q11
1Q11
2Q11
26.9
32.7
37.5
37.9
39.0
8.4
8.6
9.5
10.0
10.8
-d
LCD
3Q11
3Q11
Source: DisplaySearch, Samsung Securities
pl
is
We believe AMOLED-related applications will hinge on how competitive the displays are
in price. Wider use of the technology should therefore depend on aggressive capex
investments by SMD and progress made in improving production efficiency in areas such
as the deposition process.
ay
The table above shows that a handset AMOLED panel ASP is four times that of its LCD
counterpart. So what of the price comparison between premium screens for the iPhone
and Galaxy phone? A 3.7-inch retina display for Apple’s iPhone 4 costs USD38.50
whereas a 4.3-inch on-cell touch AMOLED (OCTA) panel for the Galaxy S2 costs USD5055. On a price-per-square-centimeter basis, however, the two are similar. We expect
companies to secure stronger price competitiveness in premium phones once the increase
in AMOLED mobile panel production capacity and improvements in production
efficiency succeed in pulling down costs. Looking ahead, cheaper AMOLED panels should
further facilitate their adoption by a wider variety of handset companies.
et
.n
Table 16. Price per square centimeter, by panel type
Price/cm2 (USD)
Panel type
LTPS AMOLED (Galaxy S series)
1.01
LTPS LCD (iPhone series)
1.02
a-Si LCD (iPad series)
0.44
Source: iSuppli, Samsung Securities estimates
At issue now is whether AMOLED tablet PCs will successfully enter the market next
year—a key example is SEC’s 7.7-inch Galaxy Tab, which features Super AMOLED Plus.
For AMOLED displays to be competitive in the market, the price gap between them and
premium LCDs needs to be as narrow as it is for mobile handsets. As shown in the
following table, a 4.3-inch OCTA panel is priced at USD50-55 while the price of a 7.7-inch
Galaxy Tab panel (three times larger than that for a Galaxy S2) is estimated at around
USD150-170---higher than the USD127 of an iPad2 IPS panel and touch-screen module
combined. The iPad3 will incorporate a new high-resolution TFT-LCD technology,
making its display more expensive than a iPad2 IPS panel, but close to the estimated price
15
December 8, 2011
AMOLED͑
of a Galaxy Tab 7.7 panel. That said, if Apple were to use AMOLED panels in its 9.7-inch
iPad, the estimated cost would be around USD250-290 per unit, making their inclusion
unlikely in the foreseeable future as a product margin exceeding USD100 would be
sacrificed.
Table 17. Panel price estimates, by type and size
Product
Estimated price (USD)
iPhone 4 (3.7" LCD)
38.50
Galaxy S2 (4.3" AMOLED)
50-55
Galaxy Tab 7.7 (7.7" AMOLED)
150-170
iPad (9.7") if AMOLED display is used
240-260
Source: iSuppli, Samsung Securities estimates
II. AMOLED panel evolution
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In our Jan 14 report, “AMOLED: Next-generation technology starting to emerge,” we
mentioned the merits and pitfalls of OLED compared to TFT-LCD. Although the use of
AMOLED in TVs remains doubtful, , the world’s leading TV maker (SEC) is committed to
creating a new market, while LG Display (LGD) is eager to predominate the TV-use panel
market. The two firms aim to boost competitiveness and bring forth commercialization by
complementing weakness in the mobile segment (vs TFT-LCD) and launching products
unknown to the TFT-LCD space.
-d
ed
In 2H11, debate has grown over whether flexible displays can be used in mobile devices as
well as TVs—see our September report for more details. In sum, flexible display panels,
which are thinner and lighter than glass type TFT-LCD panels, will be a major
differentiating factor among AMOLED panel makers.
is
Having showcased flexible displays at CES 2011, SEC has reportedly completed the design
of flexible displays it plans to launch as Galaxy Skin in 2Q12.
Chart 7. Galaxy Skin concept
Chart 8. Flexible OLED prototype
pl
ay
et
.n
Source: Samsung Electronics, Samsung Securities
Source: Samsung Electronics, Samsung Securities
We now take a look at likely changes in the AMOLED value chain amid the shift to larger
and flexible displays.
16
December 8, 2011
AMOLED͑
III. Changes in AMOLED value
chain
1. Process changes
1) TFT backplane process
-d
ed
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The low-temperature polysilicon (LTPS) process—using excimer laser annealing (ELA)
equipment to crystallize TFT substrates—remains the mainstream method of creating a
TFT backplane. The process, however, has limitations in that the narrow laser beams used
in ELAs requires multiple scans for substrates more recent than 4.5G. As the cost of this is
increasing, more and more companies are seeking to switch to oxide TFT substrates.
Jusung Engineering is currently attempting to develop metalorganic chemical vapor
deposition (MOCVD) equipment to replace oxide sputtering systems in its 8G and more
recent lines. While conventional sputtering systems use fixed proportions of materials in
the deposition process, Jusung Engineering’s MOCVD allows the proportion to be
adjusted in order to raise productivity and safety levels. However, the newly-developed
equipment will remain subject to a series of quality tests before production of large TVuse AMOLED panels can begin. Samsung Mobile Display (SMD) uses ELA equipment for
the TFT backplane process in its 5.5G and older lines, but is known to be considering the
cheaper—in terms of equipment price and maintenance costs—super grain silicon (SGS)
process for 8G and more recent lines. Tera Semicon is currently seeking to supply heattreatment equipment for the SGS process.
Chart 9. TFT-LCD backplane technology
Product Size
is
Large Size Product
50"
1. High Resolution $ UD: Oxide TFT
2. Normal Resolution $ FHD: a-Si TFT
40"
ay
30"
a-Si TFT
20"
.n
10"
5"
a-Si TFT
Oxide TFT
pl
60"
Small Size Product
a-Si TFT
LTPS TFT
et
1. High Resolution & Thin: LTPS TFT
2. Normal product: a-Si TFT
Source: DisplaySearch, Samsung Securities
17
December 8, 2011
AMOLED͑
Chart 10. AMOLED backplane technology
Product Size
Merit – Oxide TFT
60"
ĺ Similar process with a-Si TFT process
Oxide TFT
ĺ High mobility of electron than a-Si TFT
50"
Demerit – Oxide TFT
40"
ĺ Variation of Vth
ĺ Not yet mass production
30"
20"
Merit - LTPS TFT
ĺ High Mobility of electron than Oxide, a-Si TFT
10"
ĺ Stable characteristics of Device
Demerit - LTPS TFT
5"
ĺ Increase of process step : 8~11 masks
LTPS TFT
ol
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ĺ Too diff. to make large size production: Poly - Si
ĺ Large investment of equipment
Source: DisplaySearch, Samsung Securities
Chart 11. TFT backplane crystallization methods
Poly-Si
As-Deposited
ed
Crystallized
SGS
Liquid
ELA
is
-d
Solid
Source: DisplaySearch, Samsung Securities
pl
Table 18. ELA vs SGS
SGS
ELA
Feasible
Hard to use
Cost
Low
High
Performance
High
Mass production
Not tested
ay
Large area
.n
Source: DisplaySearch, Samsung Securities
High
Tested
et
Companies will also need to choose between oxide and LTPS for the active layer in flexible
AMOLED panels once the technology becomes mainstream—oxide TFT eliminates the
need for ELA equipment (which crystallizes a-Si into polysilicon). We do, however, expect
ELA equipment to remain within the value chain, as SMD will likely favor LTPS over
oxide for the time being. Tera Semicon supplies heat treatment equipment for the curing
process, required after polyimide (PI) films are adhered to flexible displays.
Also required in the production of flexible displays is laser lift-off (LLO) equipment, which
lifts the glass placed for PI deposition using lasers. AP Systems has been supplying SMD
with such equipment, but LTS also aims to be a supplier.
18
December 8, 2011
AMOLED͑
Chart 12. Flexible display process
Thin Film Encap
Thin Film Encap
R
R
G
B
G
B
TFT
TFT
PI film
PI film
PI film
Carrier Glass
Carrier Glass
Carrier Glass
Laser Delamination
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Source: DisplaySearch, Samsung Securities
2) Color deposition process
pl
is
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ed
The fine-metal-mask (FMM) method using a point source has so far been the mainstream
AMOLED color deposition process. However, the FMM method spreads materials all over
the mask and thus creates a lot of waste. An additional problem is mask distortion for
larger panels. Panel makers have consequently been experimenting with a variety of
deposition methods in efforts to create flexible and larger panels. While the FMM method
is still widely used, we believe SMD has partially adopted laser induced thermal imaging
(LITI) equipment for its phase-two A2 line, as the LITI method offers advantages over
FMM at larger panel sizes as well as higher resolution. The LITI method uses vacuum
deposition to coat organic materials on polymer film to produce donor film, and then uses
lasers for the imaging process. Overall costs are higher for the LITI process, which is also
subject to yield issues due to inferior organic material efficiency and lifespan during the
imaging process. As a result, firms are seeking a hybrid patterning system—ie, the
deposition process (without using masks) for most of the common layers and some of the
emission layers, and the LITI method for the remaining layers—in order to achieve higher
resolutions.
ay
Chart 14. …creates a lot of waste
Source: Nutmeg Consultants
Source: Nutmeg Consultants
et
.n
Chart 13. FMM deposition using point source…
Once LITI becomes the mainstream color deposition process, LITI equipment supplier
AP Systems, donor film manufacturer SFA Engineering, and related component producer
LMS should emerge as key beneficiaries. In our view, companies have yet to find a
definitive solution for the deposition process beyond 8G, and are seeking to choose
between six-partition FMM and three-partition SMS methods.
19
December 8, 2011
AMOLED͑
Chart 15. SMS deposition method
Mask
Substrate moving
(Scanning Method)
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#
Source: Displaybank, Samsung Securities
Table 19. OLED evaporation methods vs LGD’s white OLED
Laser Printing : LITI
(Laser-induced thermal imaging)
Soluble : Ink-Jet Printing
White OLED + CF
pl
Evaporation : FMM
(Fine metal mask)
is
-d
ed
When moving beyond mobile appliances to TVs, display resolution becomes less of a
factor when comparing product competitiveness. We therefore believe SMD is
experimenting with FMM, LITI, and SMS to find an optimal production method for larger
panels. SFA Engineering is currently working with SNU on a government-funded project
to develop 1,300mm-wide FMM equipment, which would allow the deposition of a 5.5G
panel in one step. However, the newly developed equipment has yet to inspire confidence
in quality. The key issue weighing on AMOLED TV panel production (as opposed to TFTLCD panels) is size—the limited reach of the laser beam used in the LTPS crystallization
process causes difficulties in covering the entire panel in one step, similar to challenges
faced in the deposition process. In sum, companies will need to find solutions to sizerelated issues before they can mass produce AMOLED TVs.
…ƒ’•—Žƒ–‹‘
ay
ƒ–Š‘†‡
WOLED Layers
( Tandem by Kodak )
Pixel Electrode = Anode
Average to good
Very good
Good
Width of pattern
± 15 ໃ
± 2.5 ໃ
± 10 ໃ
Resolution
~ 250 ppi
300-400 ppi
~ 200 ppi
Aperture ratio
Advantages
40-50 %
Verified
(currently used for mass
production)
Large-area production
Equipment and process
(mask sagging / alignment)
70-80 %
Large size
High resolution
Multi layer
Problem with blue phosphorescence
Donor film cost
Needs delamination process
~ 60%
Large size
Minimizes use of materials
Issues
G
B
W
Average
± 2.5 ໃ
et
.n
Performance
R
300- 400 ppi
Poor performance of materials
Limited suppliers of materials
Not proven yet (for MP)
60-70%
Large size
Superior productivity
Needs color filter process
High power consumption
Not proven yet (for MP)
Source: DisplaySearch, Samsung Securities
Meanwhile, LG Display continues to focus on the white-OLED method, putting speedy
commercialization of OLED TVs as top of its priority list. The method does not use RGB
independent patterning, and is thus free from FMM or LITI efficiency and yield issues.
The use of color filters further facilitates application of the method to larger substrates at
higher resolution. On the negative side, using a color filter is a disadvantage (vs the RGB
method) in terms of cost and aperture ratio.
20
December 8, 2011
AMOLED͑
3) Encapsulation process
Also unique to AMOLED displays (vs conventional TFT-LCDs) is the encapsulation
process, required to prevent the organic material from coming into contact with air and
moisture. Glass encapsulation has so far been the widely used method, but flexible
displays require a switch to thin-film encapsulation using multi-film packaging of organic
and inorganic layers.
ol
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AP Systems, a supplier of glass encapsulation equipment, is now focused on developing
metal-sheet encapsulation equipment. LTS is SMD’s sole supplier of sealing equipment
used in the final stage of the encapsulation process. Although these suppliers will
inevitably face a drop in equipment sales as SMD makes the shift to flexible displays,
recent efforts of Chinese panel makers to begin producing AMOLED panels suggest new
opportunities for glass encapsulation equipment suppliers. In addition, as costs and
stability are increasingly crucial at larger panel sizes, glass encapsulation methods may be
chosen over the thin-film method when producing larger AMOLED panels.
Chart 16. Current development of encapsulation process
Glass Encap
z
Seal uniformity
z
Too brittle
Thin film encap
ed
Metal sheet encap
z
Flexibility
z
High cost & low throughput
z
Good for large panels
z
Simple structure & low cost
-d
Source: DisplaySearch, Samsung Securities
pl
is
Thin-film encapsulation equipment is currently supplied by SNU and Ulvac, the former
having reportedly supplied some of its organic thin-film encapsulation equipment for
SMD’s phase-two A2 line. We also believe that Ulvac has supplied SMD with inorganic
thin-film encapsulation equipment. Wonik IPS is also trying to develop proprietary
encapsulation equipment ahead of the shift to larger-area (8G) AMOLED panels.
Chart 18. Thin film encapsulation structure
Source: DisplaySearch
Source: DisplaySearch
ay
Chart 17. Glass encapsulation structure
et
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21
December 8, 2011
AMOLED͑
Table 20. AMOLED equipment value chain
Process
TFT
Sub-process
Cleaning
Equipment
Cleaner
Korean equipment makers
DMS, KC Tech, STI, Meere Company, Semes*
Deposition
PECVD
Sputtering
Jusung Engineering, SFA
Avaco, SFA
Crystallization
ELA
AP Systems
SGS
Tera Semicon
Thin beam LTPS
PR coater
DMS, KC Tech, Semes*
Scanner
Developer
DMS, KC Tech, STI, Semes*
Dry etcher / asher
Wet etcher / cleaner
ICD, Wonik IPS, LIG ADP
DMS, KC Tech, STI, SFA, Semes*
Lithography
Etching
ol
w.
ww
Stripping
RGB Patterning
Encapsulation
Others
Foreign equipment makers
Shibaura Mechatronics, Hitachi
High-Technologies, DNS Electronics*, Kaijo*
AKT, Ulvac, Tokyo Electron, OC Oerlikon
AKT, Ulvac, Tokyo Electron,OC
Oerlikon, Canon Anelva*
Japan Steel Works
PR Stripper
DMS, KC Tech, STI, Semes*
Evaporator
SFA, SNU, Jusung Engineering, LIG ADP, Avaco,
Wonik IPS, Sunic System* (Dong A Eltek), YAS*
AP Systems
SNU, Avaco, AP Systems, LTS, Wonik IPS, SFA,
Jusung Engineering, LIG ADP, Tes, Sunic System*
AP Systems
LITI
Encapsulator
LLO
TCZ*
Tokyo Electron, Tokyo Ohka Kogyo,
Toray Engineering*, DNS Electronics*
Canon, Nikon
Tokyo Electron, Shibaura Mechatronics, Hitachi
High-Tech, DNS Electronics*
Ulvac, Tokyo Electron, YAC*, DNS Electronics*
Shibaura Mechatronics, Hitachi High-Tech,
Kaijo*, DNS Electronics*
Shibaura Mechatronics, Tokyo Electron, YAC*,
DNS Electronics*
Ulvac, Hitachi High-Technologies,
Tokki* (Canon)
Ulvac, Hitachi High-Technologies,
Tokki*
Toptec, Rorze Systems
Inspection
SNU, Top Engineering, LIG ADP, Meere Company
AKT, Takano, Orbotech
Logistics
SFA, Toptec, Avaco
Daifuku, Shibaura Mechatronics
ed
Laser cutting
Note: Denotes companies capable of both mass production and development
* Denotes unlisted companies
Source: Samsung Securities
pl
is
-d
ay
et
.n
22
December 8, 2011
AMOLED͑
Changes in materials
1) PI film and oxide raw materials for flexible AMOLED display
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The main TFT backplane method is still LTPS. However, as panel sizes get bigger,
investment in the LTPS process becomes increasingly burdensome. In particular, the shift
to flexible displays requires PI film deposition between the TFT and carrier glass and
separation of the glass after encapsulation. SMD has set up a joint venture with Japanese
firm Ube Kosan, which leads the world in PI film technology, and has resolved a patent
issue, increasing the possibility that it will commercialize related technology. The process
of evaporating oxide semiconductor on a plastic substrate, also has a high chance of being
commercialized, as does IGZO, which can be evaporated between flexible plastic substrate
and TFT at a low temperature—LGD is currently testing oxide for use in its 8G TFT
backplane process. SMD, however, seems skeptical regarding the efficiency of oxide TFT,
and will likely continue using the LTPS method for flexible displays following the
introduction of PI films capable of withstanding high temperatures. The key competitors
in IGZO oxide are Japanese firms Ulmat and Nikko, and Korea’s Advanced Nano
Products.
Chart 19. Flexible AMOLED process
Thin Film
Encap
G
B
TFT
Thin Film
Encap
ed
R
Chart 20. Mobile components made with polyimide
R
G
B
TFT
-d
PI film
PI film
PI film
Carrier Glass
Carrier Glass
Carrier Glass
is
Laser Delamination
pl
Source: DisplaySearch, Samsung Securities
Source: Samsung Securities
Company
Country
Korea
Korea
Samsung Corning Precision Materials
Korea
Materion
US
Umicore SA
Belgium
Heraeus
Germany
Ulmat
Japan
121600 KQ
Unlisted
Unlisted
et
Heesung Metal
Ticker
.n
Advanced Nano Products
ay
Table 21. IGZO target makers
NYSE: MTRN
UMI:BB
Unlisted
Subsidiary of Ulvac (6728 JP)
Nippon Mining & Metals
Japan
Unlisted (formerly Nikko Metals)
Mitsui Kinzoku
Japan
Mitsui Mining & Smelting (5706 JP)
Beijing Goodwill Metal Tech
China
Unlisted
Beijing Fang Yuan Material Tech
China
Unlisted
Source: Samsung Securities
23
December 8, 2011
AMOLED͑
2) Organic materials also to be used in large panels
Common layers: Dow Chemical is SMD’s sole supplier of ETL and EIL layers, while LG
Chem is the same for LGD. SMD is reportedly considering sourcing ETL layers from Cheil
Industries as well. Duksan Hi-Metal remains SMD’s primary HTL layer supplier,
although CS Elsolar (a 45.3%-owned subsidiary of CS) became a supplier in September
through Doosan Electro-Materials. LMS is reportedly awaiting SMD approval for its
sample HTL layer, but as it will be unable to start mass production before 2H12, Duksan
Hi-Metal and CS Elsolar should remain the key suppliers for the time being—Duksan HiMetal, in particular, should be able to keep its market share above 60% in terms of
capacity.
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LGD’s 8G line will mainly produce white OLEDs (WOLEDs), which require double layers
of HTL and ETL. Our channel check shows that WOLEDs are around twice as thick as
RGB OLEDs. Although it remains to be seen whether WOLEDs will become the mainstay
of large TV panels, production of WOLEDs is definitely good news for suppliers of
common layer materials (HTL and ETL).
Chart 21. White OLED structure
Cathode
ETL
Ph. YG
ed
Yellow Green
HTL
-d
P-CGL
N-CGL
CGL
HTL
Blue
pl
Fl. Blue
is
ETL
Substrate
ITO
Glass
.n
Source: Displaybank, Samsung Securities
ay
Anode
et
Emission layers: AMOLED organic materials, by nature, have a short lifespan.
Prolonging the life of each color-emitting pixel (red, green, and blue) is a challenge
AMOLED makers have to wrestle with. Blue pixels have the shortest life span, which is
not a problem in mobile phones given the short replacement cycle. For TVs, however, the
life span has to be at least 10 years.
In SMD’s value chain, red phosphorescence is solely supplied by Dow Chemical and blue
fluorescence by Sun Fine Chemical. As for green pixels, SMD is increasingly replacing
Doosan Electro-Materials’ fluorescence materials with phosphorescence materials from
UDC—Doosan Electro-Materials procures green fluorescence host materials from CS,
which sources them from subsidiary CS Elsolar.
24
December 8, 2011
AMOLED͑
Organic materials for white OLED panels come mainly from Japan:
Organic materials for white OLED panels are mainly sourced from Japan. Currently
supplying pilot lines are Idemitsu Kosan, Hodogaya, Merck, and LG Chem. White OLED
panels not only require more common layers (ie, HTL and ETL), as mentioned earlier, but
also replace red and green pixels with yellow-green pixels. Yellow-green phosphorescent
materials are provided by Merck and UDC.
SMD strengthening control over value chain: Number-one OLED panel maker
SMD is strengthening control over the value chain, something that should have
implications on the materials market. As summarized in the table below, the company set
up a polyimide-producing joint venture with Ube Industries and has signed strategic
partnerships (eg, equity investments and licenses) with most emission layer companies.
Table 22. SMD’s recent moves to enhance OLED materials value chain
Source
May 27
Electronic Times
News
Set up joint venture with Japan˅s Ube Kosan for polyimide production
Jul 20
Yomiuri Online*
Licensed patents for IGZO TFT technology invented by Professor Hideo Hosono at Tokyo Institute of Technology
Aug 12
Financial News
Samsung Venture Investment has increased stake in blue fluorescent materials maker SFC
Aug 22
Sep 29
SMD
Electronics Times
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Date
Announced strategic alliance with UDC
Ube Kosan announced USD9m investment in SUM˅s Tanjung factory, a JV between SMD and Ube Kosan.
SUM will start providing polyimide materials to SMD in 1H12
Note: * Yomiuri Online story quoted by Yonhap News
Source: Company news
Table 23. OLED materials value chain
ed
Korean players
HIL
Foreign Players
Duksan Hi-Metal, Cheil Industries, CS Elsolar (Doosan Electronics), LG Chem
Hodogaya, Idemitsu Kosan, Merck, DuPont, NSC*
Duksan Hi-Metal, CS Elsolar (Doosan Electronics), Cheil Industries, LMS, LG Chem
EIL
ETL
LG Chem ,Cheil Industries
LG Chem ,Cheil Industries
-d
HTL
Green Dopant
Green Host
CS Elsolar (Doosan Electronics), Duksan Hi-Metal
Blue Dopant
SFC*, Daejoo EM
Blue Host
SFC*, Daejoo EM
UDC, Idemitsu Kosan, Toyo Ink, NSC*
Hodogaya, Idemitsu Kosan, Toray, Merck
Hodogaya, Idemitsu Kosan, Toray, Merck
ay
Note: Denotes companies capable of both mass production and development
* Denotes unlisted companies
Source: Samsung Securities
pl
is
Red Dopant
Red Host
Hodogaya, Idemitsu Kosan, Merck, Toyo Ink, NSC*
Dow Chemical, Idemitsu Kosan, Merck, Toray, NSC*
Dow Chemical, Idemitsu Kosan, Merck, Toray, Toyo Ink,
NSC*
UDC
Dow Chemical (Gracel), Idemitsu Kosan, Mitsubishi
Chemical, Toyo Ink, Toray
UDC
et
.n
25
December 8, 2011
AMOLED͑
Changes in battery capacity
As flexible displays are thin and light, handset makers have more room for the battery.
Flexible panels are at least 1mm to 1.4mm thinner than TFT-LCD panels, which need 0.50.7mm for top and bottom glasses. The saved space can be used for a higher-capacity
battery, providing business opportunities for battery makers. Samsung SDI should benefit
from moves to expand battery capacity, as its major client SEC is strategically focusing on
flexible displays.
Apple’s iPad and iPad2 are 13.4mm and 8.8mm thick, respectively, the latter comprising a
3.51mm-thick display panel and 4mm-thick 6,900mAh battery. As high-specification
parts consume more battery power, next year’s tablet PCs will reportedly use a 3mm-thick
11,000mAh battery. Battery capacity can be increased using a flexible display, without
changing screen thickness and size.
Table 24. Thickness and battery capacity comparisons
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Model
Display
Thickness (mm)
Battery capacity (mAh)
Motorola
RAZR
AMOLED
7.1
1,780
Samsung
Galaxy S2
AMOLED
8.5
1,650
Samsung
Galaxy Nexus
AMOLED
8.9
1,750
Apple
iPhone 4
LCD
9.3
1,420
Apple
iPhone 4S
LCD
9.3
1,420
Samsung
Galaxy Note
AMOLED
9.7
2,500
Samsung
Galaxy S
AMOLED
9.9
1,500
Samsung
Google Nexus S
AMOLED
10.9
1,500
Samsung
Omnia 7
AMOLED
11.0
1,500
Samsung
Focus Flash I677
AMOLED
11.0
1,500
HTC
Google Nexus One
AMOLED
11.5
1,400
Lumia 800
AMOLED
12.1
1,450
1,400
Nokia
Dell
-d
ed
Company
AMOLED
12.9
AMOLED
7.9
5,100
Apple
iPad2
LCD
8.8
6,800
Apple
iPad1
LCD
13.4
6,600
Source: Samsung Securities
pl
is
Venue
Galaxy Tab 7.7
Samsung
Chart 22. Flexible display less than 150 micrometers thin
ay
et
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Source: NICE
26
December 8, 2011
AMOLED͑
„ CONTENTS
1. AMOLED industry overview
p2
2. Issues in 2012
p15
I. Price competitiveness of
AMOLED
p15
II. AMOLED panel evolution
p16
III. Changes in AMOLED value
chain
p17
3. Stock recommendations
p27
3. Stock recommendations
Overweight on AMOLED firms
Industry recommendation
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Next year will be a good one for AMOLED equipment makers, with supply-demand
conditions likely to be tight throughout the year and leading AMOLED panel maker SMD
expected to increase investments in its A3 and V2 lines. It should also be a year of growth
for material makers, given the increasing size of TV panels and the upcoming emergence
of flexible displays. We recommend OVERWEIGHT on the AMOLED industry as a whole.
Chart 23. AMOLED market size forecasts
ed
(KRWt)
18
16
12
is
-d
14
10
8
pl
6
4
2
2010
2011E
Source: Samsung Securities estimates
2012E
2013E
2014E
.n
Beneficiaries
ay
0
et
There are several Korean equipment and parts makers that stand to benefit from launches
of flexible AMOLED panels and large AMOLED TVs next year. Equipment makers will
see fresh order momentum late this year and early in 2012 if SMD decides to ramp up its
A3 line in 2H12. The biggest beneficiaries would be SFA Engineering, SMD’s strategic
partner and local supplier of all AMOLED process-related equipment, and AP Systems if
SMD’s A3 line uses the LITI method. Any delays in such line investments, however, would
weaken order momentum as well as investor sentiment.
Among materials makers, Duksan Hi-Metal stands out as it should grow in tandem with
AMOLED device expansion next year, regardless of changes in panel makers' process and
application technologies. Also poised to benefit are: 1) IGZO target manufacturer
Advanced Nano Products as oxide TFT backplanes are increasingly used amid a trend
toward larger panels; and 2) Samsung SDI, although not a pure player, amid rising
demand for high-capacity batteries—major client SEC is expected to use flexible
AMOLED displays that allow room for bigger batteries. Our top pick for 2012 is Duksan
Hi-Metal.
27
December 8, 2011
AMOLED͑
AMOLED peer group valuations
The best way to value AMOLED equipment makers, in our view, is P/B vs ROE. As shown
in table 25, companies currently trade near 1.3x 2012 P/B, with domestic players
commanding higher multiples (averaging 1.8x) than their overseas peers (1.0x) because of
higher ROE and greater exposure to the expanding AMOLED market. Most produce TFTLCD equipment and those more involved in AMOLED equipment trade at higher
multiples.
In contrast, P/E vs EPS growth is a better method for materials firms. UDC, a maker of
phosphorescent materials, currently trades at 46.9x 2012 P/E, much higher than the
organic materials sector average of 11.2x. Players with greater exposure to AMOLED are
trading at even higher multiples on expectations of high earnings growth.
pl
is
-d
ed
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28
December 8, 2011
AMOLED͑
Table 25. Valuations of OLED-related equipment names
Company
Currency
Market cap
P/E (x)
P/B (x)
EV/EBITDA (x)
ROE (%)
OPM (%)
EPS growth (%)
(USDm)
2011E
2012E
2011E
2012E
2011E
2012E
2011E
2012E
2011E
2012E
2011E
2012E
AP Systems
KRW
272.2
21.5
11.4
3.9
2.8
12.3
7.3
22.1
29.2
8.0
10.6
(171.2)
89.8
SFA
KRW
1,011.1
13.9
11.6
3.4
2.7
9.8
7.7
27.9
26.1
12.3
12.7
108.2
20.2
SNU
KRW
204.6
27.4
9.4
1.8
1.5
15.3
6.4
6.1
16.3
7.5
12.9
(4.5)
192.0
ICD
KRW
366.2
8.0
7.3
3.2
2.2
5.7
4.7
52.7
36.0
22.3
Avaco
KRW
102.0
11.0
9.7
1.5
1.3
6.3
6.2
15.0
14.8
5.2
20.8 1,243.0
6.4
(30.5)
8.6
14.5
Wonik IPS
KRW
588.0
19.5
12.1
3.5
2.7
15.9
9.5
12.0
21.1
10.7
12.6
(36.8)
61.2
Jusung Engineering
KRW
285.1
18.4
12.1
1.3
1.2
14.8
9.4
9.2
11.0
6.5
9.2
(53.4)
52.2
Tes
KRW
77.4
12.3
7.5
n/a
n/a
n/a
n/a
13.1
18.0
9.0
11.1
9.6
64.3
DMS
KRW
75.7
6.1
5.1
0.6
0.5
4.4
5.3
9.0
9.4
12.2
11.1
617.3
19.6
KC Tech
KRW
151.7
16.0
Domestic front-end avg
Top Engineering
Ulvac
6.4
0.9
0.8
5.1
4.0
12.9
13.6
11.1
12.0
(7.2)
9.2
2.2
1.8
10.0
6.7
18.0
19.5
11.4
12.0
167.4
53.8
5.1
5.7
0.6
0.5
3.6
4.8
12.2
9.8
12.7
12.6
129.2
(10.2)
69.2
13.7
8.9
2.1
1.6
9.3
6.5
17.5
18.7
11.5
12.0
164.0
48.0
21.5
18.8
0.5
0.5
7.6
7.1
2.4
1.6
2.5
2.8
(127.1)
14.1
20.1
1.3
1.2
5.9
6.2
6.5
6.7
9.2
9.0
(47.7)
(1.1)
18.7
0.6
0.6
6.0
6.0
5.0
3.2
1.4
1.8
13.2
2.5
0.9
0.8
2.8
2.1
7.1
6.6
4.2
4.3
1.1
3.2
4.6
4.2
10.7
13.2
10.1
12.0
(20.5)
30.7
5.5
4.6
9.1
10.8
10.3
12.2
3.0
24.1
(0.5)
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w.
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Domestic avg
KRW
7.4
14.6
JPY
651.0
JPY
9,695.5
19.9
Shibaura Mechatronics JPY
142.0
19.1
2,964.7
12.8
12.4
JPY
2,370.9
14.0
10.7
1.5
1.3
Canon Anelva (Canon) JPY
58,495.0
16.6
13.4
1.5
1.4
TEL
Hitachi High-Tech
JSW
Nikon
JPY
JPY
9,205.1
12.8
12.8
1.6
1.5
5.2
4.5
13.9
12.5
8.1
8.5
103.1
JPY
956.3
15.7
14.3
0.6
0.6
2.4
2.3
3.9
4.3
8.6
9.9
25.4
9.5
USD
13,702.3
13.7
8.7
1.4
7.5
5.2
11.8
16.6
15.6
21.0
(47.9)
56.5
OC Oerlikon
CHF
1,712.7
Daifuku
JPY
586.8
Orbotech
USD
425.8
TOK
ed
Applied Materials
1.5
6.6
n/a
n/a
n/a
n/a
33.4
26.9
13.2
13.3
70.9
(10.4)
Foreign avg
16.3
13.5
1.0
1.0
5.1
4.5
9.6
9.6
7.8
8.9
459.8
20.2
Global avg
15.1
11.3
1.5
1.3
7.2
5.5
13.4
14.0
9.7
10.4
318.3
33.5
9.3
8.8
0.9
0.8
3.2
3.1
10.1
9.8
8.9
8.8 5,160.0
34.2
16.5
0.6
0.6
n/a
n/a
1.7
3.6
2.1
2.9
Note: As of Dec 7
Source: Bloomberg, Samsung Securities
Currency
Market cap
P/E (x)
P/B (x)
pl
Table 26. Valuations of OLED-related material names
Company
107.7
is
-d
5.9
5.7
383.5
EV/EBITDA (x)
ROE (%)
OPM (%)
EPS growth (%)
(USDm)
2011E
2012E
2011E
2012E
2011E
2012E
2011E
2012E
2011E
2012E
2011E
2012E
4.7
18.5
11.2
28.8
35.7
25.6
26.9
103.1
85.4
KRW
679.8
26.6
14.4
7.0
LG Chem
KRW
19,210.3
9.8
8.5
2.5
2.0
5.8
5.0
27.4
25.1
13.8
14.7
26.2
14.8
Cheil Industries
KRW
4,631.2
15.9
12.5
1.7
1.5
10.4
8.0
11.0
13.0
6.4
7.3
17.9
26.9
ay
Duksan Hi-Metal
KRW
113.3
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
KRW
117.9
26.2
11.3
2.5
2.0
16.0
7.7
15.9
22.1
15.8
25.7
(45.7)
131.8
.n
CS
Advanced Nano Products
KRW
68.0
10.7
6.4
n/a
n/a
n/a
n/a
28.8
39.0
8.3
11.3 1,198.5
68.1
LMS
KRW
195.4
10.6
7.1
2.7
2.0
9.1
6.0
27.5
31.7
25.0
26.0
5.9
50.0
16.6
10.0
3.3
2.4
11.9
7.6
23.2
27.8
15.8
18.6
217.7
62.8
4,114.7
5.2
5.4
0.6
0.5
6.0
6.0
11.6
11.3
3.0
2.9
2.3
(4.0)
Domestic avg
et
Daejoo EM
Idemitsu Kosan
JPY
Hodogaya
JPY
249.6
11.4
10.6
0.7
0.6
n/a
n/a
5.9
6.1
5.6
7.9
185.8
6.9
Mitsubishi Chemical
JPY
8,511.6
8.8
8.0
0.8
0.7
4.7
4.3
9.3
9.0
6.0
6.2
(14.9)
10.2
Toyo Ink
JPY
1,089.9
11.4
9.8
n/a
n/a
n/a
n/a
5.0
5.6
5.6
6.3
(36.5)
16.3
UDC
USD
1,852.5
452.2
46.9
5.3
5.1
n/a
n/a
1.0
7.5
8.2
36.6 (116.8)
865.2
Dow Chemical
USD
30,313.5
9.6
9.1
1.3
1.2
5.8
5.6
14.8
13.6
8.7
52.0
5.9
Merck
USD
104,421.8
9.1
8.9
2.0
1.7
5.2
5.2
21.0
20.0
32.5
32.6 1,240.4
8.4
2.3
Kodak
USD
307.7
(0.4)
(0.9)
(0.2)
(0.1)
(0.5)
(32.0)
n/a
n/a
(6.0)
(3.9)
(0.1)
DuPont
USD
41,585.6
11.1
10.3
3.7
3.0
7.7
6.8
34.9
31.3
13.7
13.9
21.7
8.7
Coherent
USD
1,209.7
13.1
11.5
1.7
1.6
5.7
4.4
11.0
12.2
15.3
16.2
(1.8)
14.7
Foreign avg
53.2
11.9
1.8
1.6
4.9
0.0
12.7
12.9
9.3
12.7
133.2
87.4
Foreign avg (excluding UDC & Kodak)
10.0
9.2
1.5
1.3
5.9
5.4
14.2
13.6
11.3
11.8
181.1
7.6
Global avg
39.5
11.2
2.3
1.9
7.9
3.2
16.9
18.9
11.7
14.9
164.9
78.2
Global avg (excluding UDC & Kodak)
12.8
9.6
2.2
1.8
8.6
6.4
18.1
19.7
13.2
14.7
196.8
31.3
(51.7)
Note: As of Dec 7; UDC and Kodak are excluded as their figures would distort the averages;
Source: Bloomberg, Samsung Securities
29
December 8, 2011
AMOLED͑
Chart 24. OLED-related equipment players: P/B vs ROE
#
P/B (2011E, x)
5.0
4.5
AP Systems
4.0
Wonik IPS
3.5
3.0
JSW
Canon
2.5
ICD
SFA
Applied Materials
SNU
2.0
1.5
Avaco
TEL
1.0
Jusung Engineering
Hitachi Hi-Tech
0.5
Ulvac
ol
w.
ww
0.0
Top Engineering
DMS
0
10
20
30
40
50
60
ROE (2011E, %)
Note: As of Dec 7
Source: Bloomberg, Samsung Securities
Chart 25. OLED-related materials players: P/E vs EPS growth
P/E (2012E, x)
18
Hodogaya
Duksan Hi-Metal
16
ed
DuPont
Coherent
14
-d
10
Advanced Nano Products
Cheil Industries
12
Dow Chemical
8
LG Chem
Toyo Ink
is
6
Merck
4
2
LMS
Mitsubishi Chemical
Daejoo EM
(20)
0
pl
Idemitsu Kosan
0
20
60
80
100
120
140
EPS Growth (2012E, %)
ay
Note: As of Dec 7
Source: Bloomberg, Samsung Securities
40
et
.n
30
December 8, 2011
Samsung SDI (006400 KS)
Profits rising as displays evolve
Company
Update
WHAT’S THE STORY?
Event: A check on Samsung SDI and how it will benefit from expansion in
the AMOLED display market
Impact: The ever-increasing sizes of AMOLED displays in tablet PCs and
mobile phones are sure to raise per-unit battery capacity in 2012. This will
mean strong top- and bottom-line growth at SDI, driven by the firm’s highcapacity polymer batteries used in tablets and ultra-thin notebooks.
ol
w.
ww
Action: We raise our 2012 sales and operating profit forecasts for SDI to
KRW5.6t and KRW297b, respectively, and raise our target to KRW170,000.
THE QUICK VIEW
Raising 2012 forecasts on battery business prospects: We foresee strong
top- and bottom-line growth at Samsung SDI next year, driven by its rechargeable
battery business—particularly high-capacity polymer batteries used in tablet PCs and
ultra-thin notebooks. The firm should see a notable increase in operating profit in
2H12, as depreciation of its PDP P4 line will come to an end and operating losses
should narrow in its solar cell business. Against such a backdrop, we raise our 2012
sales and operating profit forecasts to a respective KRW5.6t and KRW297b
(including an anticipated KRW20b in dividend income in 1Q12). Although SDI’s solar
market debut was disappointing, the intention of management not to invest heavily
before the solar industry recovers, and the fact that module makers (including SDI)
have taken the brunt of the slump, suggest that costs will be kept to a minimum,
making 2012 a strategic year during the wait for a solar market recovery.
JungHoon Chang
Analyst
[email protected]
822 2020 7752
-d
ed
is
„ AT A GLANCE
KRW139,500
Bloomberg code
Concerns over stake in SMD overblown: In 4Q, Samsung Mobile Display
(SMD) issued corporate bonds worth KRW700b and announced aggressive capex
plans for 2012. The possibilities that SMD could be acquired by major shareholder
Samsung Electronics (SEC) and that SDI would consequently be forced to sell its
stake in SMD have raised market concern that SDI would suffer EPS losses. However,
rather than pay KRW2t for SMD, which it already effectively controls, SEC will likely
choose to solely participate in a future rights offering to help SMD raise funds for
capex needs next year. If the acquisition were to go ahead, related losses to SDI’s
equity-method income would be offset by cash proceeds from the stake sale.
ay
KRW170,000(21.9%)
Current price
pl
Target price
Ever-increasing size of AMOLED displays positive: The ever-increasing sizes
of AMOLED displays in tablet PCs and mobile phones are sure to raise per-unit
battery capacity in 2012. When demand picks up for flexible displays—which allow
more battery space—SDI will benefit significantly, having steadily increased its
capacity to produce high-capacity polymer batteries.
006400 KS
Market cap
KRW6.4t/USD5.7b
Shares (float)
45,558,341 (74.5%)
.n
52-week high/low
KRW201,000/KRW100,000
Average daily trading value
(60-day)
KRW 64.71b/
USD 57.47m
1M
6M
12M
Samsung SDI (%)
-1.1
-16.2
-21.0
Vs Kospi (%pts)
-1.1
-7.6
-18.8
et
One-year performance
Reiterating BUY, raising target price: Believing that SDI shares already reflect
the SMD-stake-related risk and that earnings will be driven higher by a rechargeablebattery boom and an end to the PDP P4 line depreciation, we raise our 2012 sales and
earnings forecasts. These and a change in valuation basis raise our 12-month target
price for SDI from KRW150,000 to KRW170,000. We consider the shares attractive
trading near 12.8x 2012 P/E and 0.9x P/B.
„ KEY CHANGES
(KRW)
New
Old
Recommendation
BUY
BUY
Diff (%)
Target price
170,000
150,000
+13.3
2011E EPS
8,789
8,729
+0.7
2012E EPS
10,881
9,378
+16
2013E EPS
12,646
11,197
+12.9
„ SAMSUNG vs THE STREET
No of I/B/E/S estimates
38
Target price vs I/B/E/S mean
-1.1%
Estimates up/down (4 weeks)
0/0
1-year-fwd EPS vs I/B/E/S mean
Estimates up/down (4 weeks)
I/B/E/S recommendation
Samsung Securities (Korea)
0/0
BUY(2.0)
„ SUMMARY FINANCIAL DATA
2010
Revenue (KRWb)
5,124.3
Net profit (adj) (KRWb)
385.1
EPS (adj) (KRW)
6,884
EPS (adj) growth (%)
182.2
EBITDA margin (%)
15.3
ROE (%)
6.7
P/E (adj) (x)
20.3
P/B (x)
1.0
EV/EBITDA (x)
7.2
Dividend yield (%)
1.1
Source: Company data, Samsung Securities estimates
www.samsungpop.com
2011E
5,456
437
8,789
27.7
14.6
6.8
15.9
1.0
7.8
1.0
2012E
5,630
547
10,881
23.8
17.6
8.0
12.8
0.9
6.4
1.1
2013E
5,670.2
645.7
12,646
16.2
19.9
8.8
11.0
0.9
6.0
1.1
December 8, 2011
Samsung SDI͑
Table 1. 4Q preview
(KRWb)
4Q11E
4Q10
#
3Q11
Chg#
(% y-y)
Sales
(% q-q)
1,450.2
1,245.0
1,447.7
16.5
0.2
39.4
14.7
43.0
168.2
(8.4)
Pre-tax profit
135.9
77.4
135.9
75.7
0.0
Net profit
138.8
81.3
100.0
70.7
38.9
Operating profit
2.7
1.2
3.0
Pre-tax profit
9.4
6.2
9.4
Net profit
9.6
6.5
6.9
Operating profit
Margins (%)
Note: IFRS-based consolidated figures
Source: Company data, Samsung Securities estimates
Table 2. Annual forecast revisions
#
ol
w.
ww
(KRWb)#
#
2011E
2012E
Old
New
Diff (%)
Old
New
5,456
5,456
0.0
5,630
5,630
0.0
232
232
0.0
217
297
37.0
Pre-tax profit
511
514
0.7
553
644
16.4
Net profit
434
437
0.7
470
547
16.4
Sales
Operating profit
Diff (%)
Note: IFRS-based consolidated figures
Source: Samsung Securities estimates
Table 3. Valuation
ed
(KRWb)
2011-2012E
Operating value*
0
-d
CRT
PDP
Notes
4,370
1,218
Rechargeable battery
Listed subsidiaries
Unlisted subsidiaries
3,443
pl
SMD
3,152
is
Non-operating value
Net debt
NAV
30% discount to market value
2,234
30% discount
1,792
1.2x book value
(97)
2012E
7,910
167,660
ay
NAVPS (KRW)
1,208
Target price (KRW)
170,000
Current price (KRW)
139,500
As of Dec 7 close
21.9
.n
Upside (%)
Note: * Calculated by applying average peer EV/EBITDA multiple to consolidated EBITDA for each division
Source: Samsung Securities estimates
et
Table 4. Sales and operating profit trends and forecasts (consolidated)
(KRWb)
1Q11
2Q11
3Q11
4Q11E
1Q12E
2Q12E
3Q12E
4Q12E
2010
2011E
2012E
Sales
1,209
1,349
1,448
1,450
1,393
1,409
1,416
1,411
5,124
5,456
5,630
CRT
101
97
92
85
81
78
74
71
496
374
304
PDP
525
527
539
541
430
432
443
428
2,269
2,131
1,734
Rechargeable battery
570
718
768
775
829
837
836
844
2,282
2,831
3,345
14
8
49
50
53
62
63
68
77
120
247
60.3
89.2
43.0
39.5
50.1
64.7
104.8
77.6
286.8
232.0
297.2
CRT
2.0
1.9
0.3
0.2
0.8
1.6
1.5
0.7
2.5
4.4
4.6
PDP
(5.2)
9.8
0.5
1.1
4.3
13.0
26.6
25.7
26.2
6.2
69.6
Other
Operating profit
Rechargeable battery
51.3
79.0
76.7
74.4
49.7
75.3
100.3
75.9
248.5
281.4
301.3
Other
(2.7)
(1.6)
(34.5)
(36.2)
(24.8)
(25.1)
(23.5)
(24.8)
(4.4)
(75.0)
(98.2)
Operating margin (%)
5.0
6.6
3.0
2.7
3.6
4.6
7.4
5.5
5.6
4.3
5.3
CRT
2.0
2.0
0.3
0.2
1.0
2.0
2.0
1.0
0.5
1.2
1.5
PDP
(1.0)
1.9
0.1
0.2
1.0
3.0
6.0
6.0
1.2
0.3
4.0
9.0
11.0
10.0
9.6
6.0
9.0
12.0
9.0
10.9
9.9
9.0
Rechargeable battery
Note: Losses at SB LiMotive are excluded from 2010 figures; dividend gains reflected in 1Q each year
Source: Company data, Samsung Securities estimates
32
December 8, 2011
Samsung SDI͑
Income statement
Balance sheet
Year-end Dec 31 (KRWb)
2009
2010
2011E
2012E
2013E
Year-end Dec 31 (KRWb)
Sales
4,950
5,124
5,456
5,630
2009
2010
2011E
2012E
2013E
5,670
Current assets
3,015
2,451
1,888
1,782
Cost of goods sold
4,226
4,334
4,529
1,420
4,662
4,695
Cash & equivalents
1,510
1,066
477
383
Gross profit
724
790
96
928
968
975
Accounts receivable
590
695
684
662
630
473
(Gross margin, %)
14.6
15.4
17.0
17.2
17.2
Inventories
368
484
496
512
SG&A expenses
617
556
583
606
611
Other current assets
547
206
231
225
221
Operating profit
185
287
232
297
342
Fixed assets
4,371
5,482
6,504
7,176
8,263
(Operating margin, %)
3.7
5.6
4.3
5.3
6.0
Investment assets
2,224
3,457
4,224
4,843
5,738
11
14
6
(3)
(13)
920
1,149
1,739
2,089
2,509
Net forex-related gains
(15)
0
(14)
(0)
10
1,884
1,727
2,004
2,075
2,282
Net equity-method gains
146
151
290
350
420
80
79
63
51
41
Other
(27)
(29)
0
0
0
183
219
213
208
202
Pre-tax profit
300
423
514
644
760
Total assets
7,386
7,934
8,392
8,958
9,683
7
37
77
97
114
Current liabilities
1,520
1,098
1,220
1,334
1,355
2.4
8.9
15.0
15.0
15.0
Accounts payable
417
385
455
512
473
215
385
437
547
646
Short-term debt
78
32
33
35
36
4.3
7.5
8.0
9.7
11.4
Other current liabilities
1,025
682
732
787
846
115
325
415
513
597
Long-term liabilities
595
604
577
553
682
2.3
6.3
7.6
9.1
10.5
Bond & long-term debt
379
228
228
228
378
Net interest income
Taxes
Net profit
(Net margin, %)
Operating net profit*
ol
w.
ww
(Effective tax rate, %)
(Operating net margin, %)
EBITDA
(EBITDA margin, %)
Reported EPS (KRW)
Adjusted EPS (KRW)**
DPS (preferred, KRW)
Dividend payout ratio (%)
784
798
989
1,126
15.3
14.6
17.6
19.9
Intangible assets
Other long-term assets
Other long-term liabilities
Total liabilities
216
376
349
325
304
2,115
1,703
1,796
1,887
2,037
4,550
8,163
9,262
11,601
13,687
Capital stock
241
241
241
241
241
6,884
8,789
10,881
12,646
Capital surplus
1,331
1,264
1,264
1,264
1,264
1,000
1,600
1,600
1,600
1,600
Retained earnings
2,892
3,391
3,723
4,158
4,683
1,050
1,650
1,650
1,650
1,650
Other
524
1,156
1,156
1,156
1,156
20.4
20.1
17.8
14.2
12.0
Non-Controlling Interests Equity
284
180
213
254
302
5,271
6,231
6,596
7,072
7,646
(838)
(778)
(208)
(97)
350
2009
2010
2011E
-d
Cash flow statement
Year-end Dec 31 (KRWb)
Tangible assets
2,439
ed
DPS (common, KRW)
765
15.5
(Equity in affiliated companies)
2012E
2013E
Total equity
Net debt
Book value per share (KRW)
110,414 133,484 141,029 150,997 162,937
489
698
725
689
215
385
437
547
646
Financial ratios
Depreciation & amortization
476
375
290
342
354
Year-end Dec 31
2009
Net forex-translation income
(18)
(2)
14
0
(10)
Growth (%)
Net equity-method income
(53)
(151)
(280)
(350)
(420)
Sales
(6.6)
3.5
6.5
3.2
0.7
604
614
616
632
632
Operating profit
39.0
55.1
(19.1)
28.1
15.1
116
(135)
74
70
38
8
19
(4)
11
7
Net profit
(33)
(0)
0
0
Operating net profit*
Gross cash flow
(-) Change in working capital
Interest received (paid)
Other
(24)
Pre-tax profit
ay
720
Net profit
pl
is
Cash flow from operations
(241)
(252) (1,081)
(659) (1,008)
EBITDA
Capex
(448)
(347)
(400)
Adjusted EPS**
Free cash flow
(550)
(550)
142
148
325
139
(23)
13
(498)
(269)
(476)
ROE (%)
Other
229
82
(34)
10
18
ROA (%)
ROIC (%)
Cash flow from financing
47
(623)
(206)
(160)
31
(35)
(586)
1
2
151
0
0
0
0
0
Dividends
(38)
(60)
(72)
(72)
(72)
Other
120
24
(135)
(90)
(49)
Change in cash
501
(367)
(589)
(94)
(288)
Cash at beginning of year
1,009
1,434
1,066
477
383
Cash at end of year
1,510
1,066
477
383
96
Change in debt
Change in equity
Note: * Excluding one off items
** Fully diluted, excluding one-off items
Source: Company data, Samsung Securities estimates
Ratios
2012E
2013E
50.8
41.1
21.6
25.3
18.0
79.4
13.5
25.3
18.0
nm
16.2
182.2
27.7
23.8
68.6
44.7
(24.6)
28.1
15.1
0.0
182.2
27.7
23.8
16.2
et
272
Change in investment assets
2011E
34.3
.n
Cash flow from investments
2010
4.3
6.7
6.8
8.0
8.8
3.0
5.0
5.4
6.3
6.9
3.6
3.4
4.2
3.0
3.6
(15.9)
(12.5)
(3.1)
(1.4)
4.6
8.0
15.1
28.3
35.9
35.3
Receivables turnover (days)
45.8
45.8
46.1
43.7
41.6
Payables turnover (days)
24.5
28.6
28.1
31.3
31.7
Inventory turnover (days)
29.0
30.3
32.8
32.7
31.7
P/E
43.7
20.3
15.9
12.8
11.0
P/B
1.0
1.0
1.0
0.9
0.9
EV/EBITDA
5.3
7.2
7.8
6.4
6.0
14.1
13.8
12.3
9.8
8.8
0.7
1.1
1.0
1.1
1.1
Net debt to equity (%)
Interest coverage (x)
Valuations (x)
EV/EBIT
Dividend yield (common, %)
33
December 8, 2011
Duksan Hi-Metal (077360 KS)
Strong steady profit growth ahead
Company
Update
G
WHAT’S THE STORY?
Event: A check on Duksan Hi-Metal (DSHM) to get a better handle on next
year’s performance
ol
w.
ww
Impact: Sales should come in at KRW200.6b next year with an operating
profit of KRW54.2b, both powered by the AMOLED materials division, in
which sales are expected to jump 88.5% to KRW132.8b. Even if the firm
loses some of its share of the AMOLED materials market, we expect strong
quarterly growth throughout next year as Samsung Mobile Display (SMD)
ramps up its production lines.
Action: Upgrading DSHM shares to BUYఒఒఒ and raising target price by
9%, for three reasons—the firm’s strong growth potential, steady margins,
and position as leading beneficiary of the coming OLED boom.
JungHoon Chang
Analyst
[email protected]
822 2020 7752
THE QUICK VIEW
-d
ed
To benefit steadily from AMOLED throughout 2012: Duksan Hi-Metal
(DSHM) should this year enjoy sales growth of 102% in its AMOLED materials
division, where sales of KRW70.4b are expected to account for 54% of total gross
sales. Next year, we foresee sales of KRW200.6b and an operating profit of
KRW54.2b, both powered by a projected 88.5% jump in EL materials sales to
KRW132.8b.
Further strong growth ahead despite temporary setbacks in 4Q11:
Although recent visits to the company show that Samsung Mobile Display (SMD) will
expand capacity by 28.9% q-q in 4Q11, we expect DSHM to report only a 17% q-q
increase in AMOLED material shipments. We noticed similar trends in 3Q, when: 1)
SMD ramped up its A2 lines (phase two) by monthly increments, causing material
shipment growth to drop below reported capacity growth; and 2) test runs of new
equipment also hindered growth in materials shipments. However, we expect visibly
strong momentum throughout 2012, as: 1) materials shipments for SMD’s phase-two
ramp-up of A2 lines are expected to reach planned levels next year; and 2) additional
growth should come from SMD’s capacity expansions at its A2 and A3 lines.
KRW36,000 (32.1%)
Current price
KRW27,250
Bloomberg code
ay
Target price
pl
is
„ AT A GLANCE
077360 KS
Market cap
KRW800.9b/USD711.3m
Shares (float)
29,392,370 (43.7%)
Three reasons to upgrade to BUYೣೣೣ: We expect only a temporary impact
on share prices from a new competitor supplying HTL materials to SMD. While the
low-demand season for IT set makers should weigh on solder-ball earnings in 1Q, we
expect a noticeable improvement in profits entering the high-demand season. Even if
the firm loses some of its share of the AMOLED materials market, we expect strong
quarterly growth throughout next year as Samsung Mobile Display (SMD) ramps up
its production lines. We therefore upgrade DSHM shares to BUY೦೦೦ and raise our
12-month target price by 9%. Our target is now entirely based on projected 2012 EPS.
The stock is currently trading at 15.8x 2012 P/E, yet the company should continue to
outperform peers in terms of EPS growth, with a projected 67.6% next year.
.n
52-week high/low
KRW30,150/KRW19,150
Average daily trading value
(60-day)
KRW 14.28b/
USD 12.68m
1M
6M
12M
Duksan Hi-Metal (%)
-7.0
+21.9
+27.6
Vs Kosdaq (%pts)
-6.2
+15.0
+27.4
Diff (%)
et
One-year performance
„ KEY CHANGES
(KRW)
New
Old
BUYఒఒఒ
BUY
Target price
36,000
33,000
+9.1%
2011E EPS
1,028
1,016
+1.2%
2012E EPS
1,723
1,790
-3.7%
2013E EPS
1,986
2,586
-23.2%
Recommendation
„ SAMSUNG vs THE STREET
No of I/B/E/S estimates
18
Target price vs I/B/E/S mean
-0.8%
Estimates up/down (4 weeks)
0/0
1-year-fwd EPS vs I/B/E/S mean
Estimates up/down (4 weeks)
I/B/E/S recommendation
Samsung Securities (Korea)
-5.8%
2/3
BUY(1.6)
„ SUMMARY FINANCIAL DATA
2010
Revenue (KRWb)
72.5
Net profit (adj) (KRWb)
10.1
EPS (adj) (KRW)
356
EPS (adj) growth (%)
74.1
EBITDA margin (%)
29.4
ROE (%)
12.4
P/E (adj) (x)
76.6
P/B (x)
10.2
EV/EBITDA (x)
37.8
Dividend yield (%)
0.0
Source: Company data, Samsung Securities estimates
www.samsungpop.com
2011E
130
32
1,028
189.1
29.0
28.9
26.5
7.2
21.2
0.0
2012E
201
51
1,723
67.6
31.1
34.1
15.8
4.7
12.5
0.0
2013E
291.3
58.5
1,986
15.2
24.3
28.5
13.7
3.4
10.7
0.0
December 8, 2011
Duksan Hi-Metal͑
Chart 1. 2010 sales, by division
Chart 2. Estimated 2011 sales, by division
Semiconductor
Materials
Division 52%
EL Materials
Division 48%
Semiconductor
Materials
Division 46%
EL Materials
Division 54%
ol
w.
ww
Source: Company data, Samsung Securities
Source: Company data, Samsung Securities estimates
Chart 3. Quarterly sales vs operating margin
Chart 4. Shareholder structure
(KRWb)
40
35
30
30
20
Joonho Lee
and 11 others
41.97%
20
15
-d
15
Other 39.37%
25
ed
25
(%)
10
10
5
5
is
0
0
1Q10
2Q10
3Q10
1Q11
2Q11
3Q11
4Q11E
Operating margin (RHS)
pl
Sales (LHS)
4Q10
Source: Company data, Samsung Securities estimates
Treasury
stock 14.35%
Morgan
Stanley
4.31%
Source: Company data, Samsung Securities
(KRWb)#
#
2011E
Old
New
130.2
Operating profit
32.5
32.9
Pre-tax profit
32.7
33.0
Net profit
31.1
31.5
Source: Samsung Securities estimates
Table 2. Valuation
(KRW)
EPS
2012E
1,723
Old
New
Diff (%)
1.0
216.1
200.6
(7.2)
1.2
59.5
54.2
(9.0)
1.2
59.3
54.0
(9.0)
51.3
(3.9)
1.2
et
128.9
2012E
Diff (%)
.n
Sales
#
ay
Table 1. Forecast revisions
53.3
Remarks
2012E EPS
Applied P/E (x)
15.8
P/E of AMOLED-materials peers
Premium (%)
30.0
Reflecting high EPS growth
Fair value per share
35,308
Target price
36,000
Price
27,250
Upside (%)
As of Dec 7 close
32.1
Source: Samsung Securities estimates
35
December 8, 2011
Duksan Hi-Metal͑
Table 3. Quarterly earnings trends and forecasts
(KRWb)
1Q11
2Q11
3Q11
4Q11E
1Q12E
2Q12E
3Q12E
4Q12E
2010
2011E
2012E
23.3
33.9
35.4
37.7
39.8
43.1
54.6
63.1
72.5
130.2
200.6
Solder balls
12.6
15.2
16.1
15.8
14.7
16.7
18.5
17.9
37.7
59.7
67.8
EL materials
10.7
18.6
19.3
21.9
25.1
26.4
36.1
45.2
34.8
70.4
132.8
Sales
Operating profit
5.5
8.5
9.8
9.1
9.7
11.7
15.6
17.1
13.1
32.9
54.2
23.7
25.0
27.8
24.0
24.5
27.2
28.6
27.0
18.1
25.3
27.0
Pre-tax profit
5.8
8.3
10.1
8.9
9.6
11.7
15.6
17.1
12.5
33.0
54.0
Net profit
5.3
8.6
9.8
7.8
8.7
10.5
14.0
18.0
10.1
31.5
51.3
Operating margin (%)
Source: Company data, Samsung Securities estimates
pl
is
-d
ed
ol
w.
ww
ay
et
.n
36
December 8, 2011
Duksan Hi-Metal͑
Income statement
Balance sheet
Year-end Dec 31 (KRWb)
2009
2010
2011E
2012E
2013E
Sales
32.1
72.5
130.2
200.6
Cost of goods sold
19.7
42.7
70.7
Gross profit
12.4
29.7
59.5
(Gross margin, %)
38.7
41.0
45.7
53.2
7.7
16.6
26.7
51.5
SG&A expenses
Year-end Dec 31 (KRWb)
2009
2010
2011E
2012E
2013E
291.3
Current assets
26.0
21.5
46.2
88.5
135.2
94.0
165.1
Cash & equivalents
14.1
5.3
9.1
29.3
51.3
106.6
126.2
Accounts receivable
3.7
7.2
16.3
26.5
36.4
43.3
Inventories
3.6
6.7
12.4
18.7
27.2
62.5
Other current assets
4.6
2.4
8.4
13.9
20.2
4.7
13.1
32.9
54.2
61.5
Fixed assets
65.8
90.1
101.4
112.8
126.3
(Operating margin, %)
14.6
18.1
25.3
27.0
21.1
Investment assets
15.1
16.3
18.5
22.6
26.5
Net interest income
(0.6)
(0.2)
(0.4)
(0.2)
0.1
(Equity in affiliated companies)
0.3
0.1
0.1
0.1
0.1
0.1
(0.2)
0.6
0.0
0.0
Tangible assets
18.4
44.3
51.1
56.7
64.7
Intangible assets
29.8
27.1
29.5
31.5
33.1
2.5
2.3
2.2
2.0
1.9
Operating profit
Net forex-related gains
Net equity-method gains
Other
Pre-tax profit
Taxes
Net profit
(Net margin, %)
Operating net profit*
(Operating net margin, %)
EBITDA
(EBITDA margin, %)
Reported EPS (KRW)
Adjusted EPS (KRW)**
0.0
0.0
0.0
0.1
(0.0)
(0.0)
(0.0)
Other long-term assets
5.7
12.5
33.0
54.0
61.6
Total assets
91.8
111.6
147.5
201.3
261.5
1.0
2.4
1.5
2.7
3.1
Current liabilities
15.7
11.1
12.9
15.5
17.1
16.8
19.0
4.7
5.0
5.0
Accounts payable
1.3
2.6
5.5
8.1
9.7
4.7
10.1
31.5
51.3
58.5
Short-term debt
6.0
1.9
1.9
1.9
1.9
14.7
14.0
24.2
25.6
20.1
Other current liabilities
8.4
6.6
5.5
5.5
5.5
DPS (preferred, KRW)
Dividend payout ratio (%)
4.3
8.8
30.1
50.7
58.4
Long-term liabilities
5.6
7.3
9.7
9.7
9.7
13.4
12.2
23.1
25.3
20.0
Bond & long-term debt
5.2
6.6
9.6
9.6
9.6
9.8
21.3
37.8
62.3
70.7
Other long-term liabilities
30.5
29.4
29.0
31.1
24.3
Total liabilities
224
409
1,077
1,744
1,990
Capital stock
204
356
1,028
1,723
1,986
Capital surplus
0
0
0
0
0.0
0.0
0
0
0
Retained earnings
0
0
0
Other
0.0
0.0
0.0
Cash flow statement
-d
ed
DPS (common, KRW)
(0.3)
ol
w.
ww
(Effective tax rate, %)
2.2
(0.7)
Non-controlling interest equity
Total equity
Net debt
Book value per share (KRW)
0.4
0.7
0.1
0.1
0.1
21.3
18.3
22.7
25.2
26.8
4.9
5.8
5.9
5.9
5.9
67.7
75.8
75.8
75.8
75.8
20.6
30.7
62.3
113.5
172.0
(22.7)
(19.1)
(19.1)
(19.1)
(19.1)
0.0
0.0
0.0
0.0
0.0
70.5
93.3
124.9
176.1
234.6
(3.0)
5.7
0.9
(22.5)
(47.7)
2,010
2,682
3,787
5,745
8,006
2009
2010
2011E
2012E
2013E
79.6
54.1
45.3
150.5
64.7
13.6
63.3
14.1
2009
2010
2011E
2012E
2013E
Cash flow from operations
10.4
10.3
23.2
46.6
53.0
Net profit
4.7
10.1
31.5
51.3
58.5
Depreciation & amortization
3.5
8.6
4.3
8.2
9.2
Year-end Dec 31
Net forex-translation income
(0.2)
0.2
(0.6)
0.0
0.0
Growth (%)
Net equity-method income
(1.4)
0.3
0.0
0.0
0.0
Sales
41.8
125.5
6.1
22.4
35.6
60.6
69.8
Operating profit
(4.4)
179.2
4.4
(12.1)
(12.4)
(14.1)
(16.7)
RB
119.8
163.9
Interest received (paid)
Other
Capex
Free cash flow
Other
Cash flow from financing
Change in debt
0.0
0.0
0.0
0.0
Net profit
(0.0)
0.0
0.0
0.0
Operating net profit*
(10.2)
(28.4)
(21.0)
(25.2)
(28.9)
EBITDA
(7.2)
(28.2)
(9.8)
(12.0)
(15.0)
Adjusted EPS**
3.3
(17.9)
13.4
34.6
38.0
Ratios
0.6
1.4
(2.2)
(4.0)
(4.0)
ROE (%)
(3.6)
(1.6)
(9.0)
(9.2)
(9.9)
ROA (%)
0.2
8.9
1.6
(1.2)
(2.1)
ROIC (%)
(12.1)
2.5
5.5
2.5
2.5
Net debt to equity (%)
RB
114.0
210.7
62.7
14.1
46.1
104.0
241.4
68.4
15.2
(20.5)
171.9
194.9
64.1
13.6
34
74
189
68
15
et
Change in investment assets
0.0
(0.0)
.n
Cash flow from investments
Pre-tax profit
ay
(-) Change in working capital
Financial ratios
pl
Gross cash flow
is
Year-end Dec 31 (KRWb)
8.7
12.4
28.9
34.1
28.5
6.1
10.0
24.3
29.4
25.3
5.5
10.7
24.9
29.2
24.9
(4.2)
6.1
0.7
(12.8)
(20.3)
Change in equity
0.0
6.0
0.1
0.0
0.0
Interest coverage (x)
Dividends
0.0
0.0
0.0
0.0
0.0
Receivables turnover (days)
12.3
0.4
(4.0)
(3.7)
(4.6)
Payables turnover (days)
12.2
9.8
11.4
12.4
11.1
0.4
(9.2)
3.8
20.2
22.0
Inventory turnover (days)
32.3
25.9
26.7
28.3
28.8
Cash at beginning of year
14.1
14.6
5.3
9.1
29.3
Valuations (x)
Cash at end of year
14.6
5.3
9.1
29.3
51.3
P/E
42.1
76.6
26.5
15.8
13.7
P/B
4.3
10.2
7.2
4.7
3.4
EV/EBITDA
18.8
37.8
21.2
12.5
10.7
EV/EBIT
29.3
63.1
24.0
14.4
12.2
0.0
0.0
0.0
0.0
0.0
Other
Change in cash
Note: * Excluding one off items
** Fully diluted, excluding one-off items
Source: Company data, Samsung Securities estimates
Dividend yield (common, %)
4.2
18.6
45.8
76.0
86.3
34.3
27.3
32.8
38.9
39.4
G
37
December 8, 2011
SFA Engineering (056190 KS)
All-round OLED player
Company
Update
G
WHAT’S THE STORY?
Event: A check on display and logistics-automation equipment maker SFA
Engineering and its steady inflows of back-end-process and vacuumlogistics equipment orders
Impact: Having secured KRW450.2b-worth of orders over 1Q-3Q, the firm
expects to meet its annual target of more than KRW700b helped by robust
orders for OLED front-end equipment—such orders should continue to
drive growth next year.
ol
w.
ww
Action: With SFA shares now trading at 2.6x 2012 consensus P/B, a
premium to the peer average, we expect stock-price momentum to hinge on
the timing and size of next-generation (AMOLED) capacity expansion at
Samsung Mobile Display.
JungHoon Chang
Analyst
[email protected]
822 2020 7752
THE QUICK VIEW
-d
ed
Growing in sync with Samsung Group: Having spun off from Samsung
Techwin’s automation division in Dec 1998, display and logistics-automation
equipment maker SFA Engineering was founded as a holding company and went
public in 2001. Since the IPO, it has grown an average of 22% pa, powered by
aggressive LCD and PDP investments at Samsung Electronics (SEC) and Samsung
SDI. SEC became the firm’s strategic partner in May 2010 by purchasing a 10.2%
stake. The firm’s largest shareholder DY Asset has a 33.09% stake.
is
„ AT A GLANCE
Expected to win orders for diverse types of OLED-related equipment:
SFA enjoys steady inflows of back-end-process and vacuum-logistics equipment
orders from Samsung Mobile Display (SMD) for its AMOLED and TFT-LCD
businesses. The firm is currently developing 8G OLED PECVDs used in TFT
deposition, a key front-end process, and sputter equipment in preparation for an
SMD-shift toward oxide TFT display. It is also expected to supply evaporation
equipment, an integral part of the color patterning process.
Not rated
KRW62,800
Bloomberg code
ay
n/a
Current price
pl
Target price
056190 KS
Market cap
KRW1.1t/USD1.0b
Shares (float)
17,954,380 (51.8%)
Valuation: Having secured KRW450.2b-worth of orders over 1Q-3Q, the firm
expects to meet its annual target of more than KRW700b helped by robust orders for
OLED front-end equipment. Such orders should also drive growth next year—
consensus estimates foresee sales of KRW920b and an operating profit of KRW116.6b.
With SFA shares now trading at 2.6x 2012 consensus P/B, a premium to the peer
average, we expect stock-price momentum to hinge on the timing and size of nextgeneration (AMOLED) capacity expansion at Samsung Mobile Display.
.n
52-week high/low
KRW70,200/KRW44,500
Average daily trading value
(60-day)
KRW 10.99b/
USD 9.76m
1M
6M
12M
SFA Engineering (%)
+2.5
+10.8
+28.7
Vs Kosdaq (%pts)
+3.3
+3.8
+28.5
Diff (%)
et
One-year performance
„ KEY CHANGES
(KRW)
New
Old
Recommendation
n/a
n/a
Target price
n/a
n/a
2011E EPS
n/a
n/a
-
2012E EPS
n/a
n/a
-
2013E EPS
n/a
n/a
-
-
„ SAMSUNG vs THE STREET
No of I/B/E/S estimates
17
Target price vs I/B/E/S mean
-
Estimates up/down (4 weeks)
0/0
1-year-fwd EPS vs I/B/E/S mean
Estimates up/down (4 weeks)
I/B/E/S recommendation
Samsung Securities (Korea)
1/0
BUY(1.8)
„ SUMMARY FINANCIAL DATA
2007
Revenue (KRWb)
307
Net profit (adj) (KRWb)
42
EPS (adj) (KRW)
2,349
EPS (adj) growth (%)
(21.0)
EBITDA margin (%)
17.8
ROE (%)
22.5
P/E (adj) (x)
19.2
P/B (x)
4.0
EV/EBITDA (x)
5.2
Dividend yield (%)
2.1
Source: Company data, Samsung Securities
www.samsungpop.com
2008
431
50
2,783
18.5
15.2
23.4
19.9
4.4
6.8
2.1
2009
307
18
910
(67.3)
8.0
8.0
43.6
3.1
10.9
0.6
2010
423.0
39.4
2,198
141.5
11.9
16.0
29.7
4.4
19.8
0.8
December 8, 2011
SFA Engineering͑
Chart 1. Quarterly sales vs operating margin
Chart 2. 1Q-3Q11 sales, by equipment type
(KRWb)
(%)
250
Backend &
module
15%
14
Front end
2%
12
200
10
150
8
100
6
Sales
KRW495b
FGA
17%
4
50
Logistics
66%
2
0
0
1Q10
2Q10
3Q10
4Q10
Sales (LHS)
1Q11
2Q11
3Q11
Operating margin (RHS)
ol
w.
ww
Note: K-GAAP based figures until 4Q10, K-IFRS based from 1Q11
Source: Company data, Samsung Securities
Source: Company data, Samsung Securities
Chart 3. Yearly sales vs new orders
Chart 4. 1Q-3Q11 new orders, by area
(KRWb)
800
700
Backend &
module
18%
ed
600
Front end
2%
500
400
Accrued new
orders
KRW450.2b
-d
300
200
0
2006
2007
2008
2009
2010
pl
Sales
New Orders
Source: Company data, Samsung Securities
Logistics
63%
is
100
FGA
17%
Source: Company data, Samsung Securities
Other 40.0%
.n
ay
Chart 5. Shareholder structure
Treasury
Stock 1.5%
Samsung
Electronics
10.2%
et
DY Asset and
4 others
36.6%
Korea Investment
Management and 3
others 11.7%
Source: Company data, Samsung Securities
G
G
G
G
39
December 8, 2011
SFA Engineering͑
Chart 6. OLED-related equipment makers: P/B vs ROE
P/B (2011E, x)
4.5
DS#V|vwhpv
4.0
Zrqln#LSV
VID
3.5
3.0
LFG
MVZ
2.5
VQX
2.0
Dssolhg#Pdwhuldov
Dydfr
Fdqrq
1.5
WHO
1.0
0.5
Xoydf
Mxvxqj#Hqjlqhhulqj
Klwdfkl Kl0Whfk
Wrs#Hqjlqhhulqj
GPV
0.0
0
10
20
30
40
ol
w.
ww
50
60
ROE (2011E, %)
Source: Bloomberg, Samsung Securities
Table 1. Peer valuations
Company
Code
Market Cap
P/E (x)
P/B (x)
EV/EBITDA (x)
ROE (%)
OPM (%)
(USDm)
2011E
2012E
2011E
2012E
2011E
2012E
2011E
2012E
2011E
2012E
030530 KS
594.5
19.4
12.0
3.5
2.7
15.8
9.4
12.0
21.1
10.7
12.6
SNU Precision
080000 KS
224.3
29.5
10.1
1.9
1.6
16.5
6.9
13.8
20.0
7.5
12.9
ICD
040910 KS
427.3
9.2
8.4
3.7
2.6
6.6
5.6
52.7
36.0
22.3
20.8
Avaco
083930 KS
107.8
11.5
10.0
1.6
1.4
6.6
6.5
15.0
14.8
5.2
6.4
AP Systems
054620 KS
292.9
23.1
12.0
3.0
13.2
7.0
21.7
29.3
7.9
11.7
Domestic
18.5
ed
Wonik IPS
4.2
2.3
11.7
7.1
23.0
24.2
10.7
12.9
20.9
1.3
1.2
6.2
6.5
6.5
6.7
9.2
9.0
0.6
0.6
7.9
7.4
2.3
1.6
2.4
2.6
0.9
0.8
2.8
2.1
7.1
6.6
4.2
4.3
0.9
5.7
5.4
5.3
4.9
5.3
5.3
1.7
9.5
6.4
16.4
17.0
8.7
10.0
10.5
3.0
-d
8035 JP
10,050.7
20.5
Ulvac
6728 JP
717.6
24.3
22.1
Hitachi Hitech
8036 JP
2,973.8
12.9
12.5
International
19.2
18.5
0.9
Overall average
18.8
13.5
2.2
Source: Bloomberg, Samsung Securities
pl
G
is
TEL
ay
et
.n
40
December 8, 2011
SFA Engineering͑
Income statement
Balance sheet
Year-end Dec 31 (KRWb)
2006
2007
2008
2009
2010
Year-end Dec 31 (KRWb)
2006
2007
2008
2009
2010
Sales
380.8
306.8
430.8
307.1
423.0
Current assets
233.7
248.1
274.3
166.6
494.1
Cost of goods sold
66.3
297.3
244.3
355.1
270.4
352.8
Cash & equivalents
13.5
9.0
36.0
26.1
Gross profit
83.5
62.5
75.7
36.7
70.2
Accounts receivable
60.6
61.6
46.5
38.5
86.0
(Gross margin, %)
21.9
20.4
17.6
12.0
16.6
Inventories
34.7
49.2
109.3
26.8
215.7
SG&A expenses
19.5
18.4
22.2
21.5
32.4
Other current assets
124.9
128.3
82.5
75.3
126.1
Operating profit
64.1
44.1
53.5
15.2
37.8
Fixed assets
107.5
129.1
142.7
143.1
135.5
(Operating margin, %)
16.8
14.4
12.4
4.9
8.9
Investment assets
25.4
37.6
43.2
43.8
32.6
6.7
6.9
7.5
4.9
4.6
(Equity in affiliated companies)
19.3
20.3
21.1
20.3
24.6
93.8
Net interest income
Net forex-related gains
Net equity-method gains
Other
(0.3)
0.3
5.6
(1.8)
2.3
Tangible assets
74.5
82.3
90.3
90.8
2.6
1.0
0.5
2.9
2.2
Intangible assets
0.0
0.0
0.0
0.0
0.5
(2.3)
5.3
1.4
3.9
3.2
Other long-term assets
7.6
9.2
9.2
8.5
8.5
629.6
70.7
57.6
68.5
25.1
50.0
Total assets
341.2
377.2
417.0
309.7
Taxes
17.2
15.5
18.7
7.0
10.7
Current liabilities
148.8
155.1
178.0
69.3
356.8
(Effective tax rate, %)
24.3
27.0
27.3
28.1
21.3
Accounts payable
50.9
47.4
41.2
30.2
104.0
Short-term debt
Net profit
(Net margin, %)
ol
w.
ww
Pre-tax profit
53.5
42.0
49.8
18.0
39.4
0.0
0.0
0.0
0.0
0.0
14.1
13.7
11.6
5.9
9.3
Other current liabilities
97.9
107.7
136.8
39.0
252.7
53.4
42.2
50.0
16.3
39.5
Long-term liabilities
21.2
19.7
16.3
12.1
8.8
(Operating net margin, %)
14.0
13.7
11.6
5.3
9.3
Bond & long-term debt
0.0
0.0
0.0
0.0
0.0
EBITDA
67.5
54.5
65.5
24.7
50.2
Other long-term liabilities
17.7
17.8
15.2
8.0
11.9
Total liabilities
Operating net profit*
(EBITDA margin, %)
2,341
2,773
1,004
2,192
Capital stock
2,972
2,349
2,783
910
2,198
Capital surplus
DPS (common, KRW)
1,200
1,400
1,400
400
500
0
0
0
0
0
20.4
30.3
24.9
19.6
22.5
DPS (preferred, KRW)
Dividend payout ratio (%)
Cash flow statement
Year-end Dec 31 (KRWb)
-d
ed
2,981
Adjusted EPS (KRW)**
Reported EPS (KRW)
Retained earnings
Other
Non-Controlling Interests Equity
Total equity
Net debt
2008
2009
2010
(32.6)
31.9
30.5
(3.3)
84.8
53.5
42.0
49.8
18.0
39.4
Depreciation & amortization
3.5
3.9
4.5
4.6
4.8
Net forex-translation income
0.2
(0.2)
(2.6)
1.0
(0.6)
Growth (%)
(2.6)
(1.0)
(0.5)
(2.9)
(2.2)
Sales
61.4
43.9
55.5
23.0
51.8
Operating profit
Pre-tax profit
Gross cash flow
(25.0)
(26.3)
33.1
0.0
0.0
0.0
0.0
Net profit
Other
0.0
(0.0)
0.0
0.0
0.0
Operating net profit*
Cash flow from investments
4.1
(26.2)
26.8
6.0
(45.6)
(10.3)
(11.3)
(10.4)
(3.8)
(8.1)
Adjusted EPS**
(42.9)
20.7
20.2
(7.0)
76.7
Ratios
Change in investment assets
Other
Cash flow from financing
EBITDA
54.6
(12.6)
(5.0)
(0.5)
(4.5)
ROE (%)
(40.2)
(2.3)
42.1
10.2
(33.0)
ROA (%)
5.3
(10.9)
(29.7)
(12.4)
0.8
ROIC (%)
Change in debt
0.0
0.0
0.0
0.0
0.0
Net debt to equity (%)
Change in equity
0.0
0.0
0.0
0.0
0.0
Interest coverage (x)
(9.4)
(10.9)
(12.8)
(12.4)
(3.5)
Dividends
365.6
4.6
4.6
4.6
4.6
9.0
24.7
24.7
24.7
24.7
20.2
142.1
173.2
210.3
215.9
251.7
(0.2)
(0.2)
(16.8)
(16.9)
(16.9)
0.0
0.0
0.0
0.0
0.0
171.2
202.3
222.7
228.3
264.0
9,535
(91.1) (179.5)
11,268 12,590 12,906 14,894
Receivables turnover (days)
2007
2008
2009
2010
8.4
(19.5)
40.4
(28.7)
37.7
37.2
(31.2)
21.4
(71.6)
148.6
32.7
(18.6)
19.0
(63.4)
99.6
30.2
(21.4)
18.4
(63.8)
118.3
30.2
(21.0)
18.5
(67.3)
141.5
34.6
(33.6)
20.8
(71.9)
171.8
30
(21)
18
(67)
142
et
(12.0)
0.0
Free cash flow
8.8
81.4
16.0
.n
(93.9)
Interest Received (Paid)
Capex
12.1
2006
ay
(-) Change in working capital
16.3
194.3
Financial ratios
Year-end Dec 31
pl
Net equity-method income
is
2007
Net profit
19.7
174.8
(129.0) (128.4) (110.2)
Book value per share (KRW)
2006
Cash flow from operations
21.2
170.0
37.5
22.5
23.4
8.0
15.1
11.7
12.5
5.0
8.4
28.3
15.9
17.5
4.8
11.3
(75.4)
(63.4)
(49.5)
(39.9)
(68.0)
nm
0.0
0.0
0.0
0.0
45.2
72.7
45.8
50.5
53.7
14.7
0.0
(16.9)
0.0
4.3
Payables turnover (days)
47.2
58.5
37.5
42.4
57.9
(23.2)
(5.2)
27.6
(9.7)
40.0
Inventory turnover (days)
50.5
49.9
67.1
80.8
104.6
Cash at beginning of year
38.2
14.9
9.8
37.4
27.7
Valuations (x)
Cash at end of year
14.9
9.8
37.4
27.7
67.7
P/E
10.2
19.2
19.9
43.6
29.7
P/B
3.2
4.0
4.4
3.1
4.4
EV/EBITDA
2.2
5.2
6.8
10.9
19.8
Other
Change in cash
Note: * Excluding one off items
** Fully diluted, excluding one-off items
Source: Company data, Samsung Securities
EV/EBIT
2.3
5.6
7.3
13.3
21.9
Dividend yield (common, %)
1.8
2.1
2.1
0.6
0.8
41
December 8, 2011
Wonik IPS (030530 KS)
OLED shift to spur growth
Company
Update
G
WHAT’S THE STORY?
Event: A check on semiconductor equipment maker Wonik IPS prior to the
listing of subsidiary Wonik Materials
Impact: Market attention will be on Wonik IPS for two reasons: 1) the
firm’s stake in the subsidiary should be worth KRW70b based on the
guideline IPO price; and 2) its entry into the OLED market bodes well for
growth momentum.
ol
w.
ww
Action: Shares in Wonik IPS are currently trading at 12.0x 2012 P/E and
2.7x P/B (based on Bloomberg consensus), similar to those of peers, but
worth considering as the firm’s semiconductor-related equipment sales
should steadily rise, its subsidiary will soon go public, and potential for
overall growth is high, shown by Samsung Electronics’ investment in Wonik
IPS convertible bonds.
JungHoon Chang
Analyst
[email protected]
822 2020 7752
THE QUICK VIEW
ed
-d
Supplier of essential front-end equipment for semiconductors & displays:
Wonik IPS was created on Dec 29, 2010 following a merger involving IPS and Atto.
The former manufactured semiconductor ALDs, display dry etchers, and solar cell
PECVDs, while the latter produced semiconductor PECVD equipment. Atto
subsidiary Wonik Materials was spun off and will soon go public. Samsung
Electronics (SEC) owns convertible bonds in Wonik IPS worth around KRW22b,
equating to a 9.4% stake if converted.
is
„ AT A GLANCE
Subsidiary Wonik Materials set to go public: Wonik Materials is scheduled
for book building on Dec 9 with a price range of KRW23,000-26,000. Based on such
a range, the subsidiary’s market cap should total KRW133.4b~KRW150.8b and
Wonik IPS’s post-IPO stake should be 49.66% and worth KRW65b-75b, equating to
around 10.5% of its own market cap.
Not rated
KRW9,640
Bloomberg code
ay
n/a
Current price
pl
Target price
030530 KS
Market cap
AMOLED to become major growth driver: Wonik IPS is set to secure new
growth momentum following its recent development of a proprietary 8G AMOLED
dry etcher. Its deposition and encapsulation equipment division is expanding to
include the development of large-area equipment. The firm has secured an 11,000pyeong site in Asan, on which to build a clean-room plant for equipment
development and mass production.
KRW668.9b/USD594.0m
Shares (float)
69,392,633 (63.7%)
.n
52-week high/low
KRW11,300/KRW5,180
Average daily trading value
(60-day)
KRW 24.69b/
USD 21.93m
1M
6M
12M
Wonik IPS (%)
+5.9
+67.7
+29.6
Vs Kosdaq (%pts)
+6.7
+60.7
+29.3
Diff (%)
et
One-year performance
Valuation worth a look: Wonik IPS’s 2012 guidance remains unchanged at sales
of KRW480b and operating margin in the low teens. The stock is currently trading at
12.0x 2012 P/E and 2.7x P/B (based on Bloomberg consensus), similar to those of
peers, but worth considering as the firm's semiconductor-related sales should
steadily rise, its subsidiary will soon go public, and potential for overall growth is
high, shown by Samsung Electronics' investment in Wonik IPS convertible bonds.
„ KEY CHANGES
(KRW)
New
Old
Recommendation
n/a
n/a
Target price
n/a
n/a
2011E EPS
n/a
n/a
-
2012E EPS
n/a
n/a
-
2013E EPS
n/a
n/a
-
-
„ SAMSUNG vs THE STREET
No of I/B/E/S estimates
5
Target price vs I/B/E/S mean
-
Estimates up/down (4 weeks)
0/0
1-year-fwd EPS vs I/B/E/S mean
Estimates up/down (4 weeks)
I/B/E/S recommendation
Samsung Securities (Korea)
0/0
BUY(1.8)
„ SUMMARY FINANCIAL DATA
2008
Revenue (KRWb)
76
Net profit (adj) (KRWb)
12
EPS (adj) (KRW)
404
EPS (adj) growth (%)
(13.5)
EBITDA margin (%)
25.9
ROE (%)
18.2
P/E (adj) (x)
4.5
P/B (x)
0.9
EV/EBITDA (x)
2.2
Dividend yield (%)
0.0
Source: Company data, Samsung Securities
www.samsungpop.com
2009
91
12
369
(8.7)
19.5
14.6
7.3
1.0
3.0
0.0
2010
173
26
795
115.6
18.7
11.9
9.9
2.9
16.4
0.0
2011E
310
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
December 8, 2011
Wonik IPS͑
Chart 1. Quarterly sales vs operating margin
Chart 2. Customer breakdown
(KRWb)
(%)
120
Other 15%
25
20
100
Hynix Semiconductor
5%
15
80
10
5
60
0
40
(5)
20
Samsung
Electronics
80%
(10)
(15)
0
1Q10
2Q10
3Q10
4Q10
Sales (LHS)
1Q11
2Q11
3Q11
Operating margin (RHS)
ol
w.
ww
Source: Company data, Samsung Securities
Source: Company data, Samsung Securities
Chart 3. Shareholder structure
Chart 4. Estimated 2011 sales, by client industry
Wonik
Corporation
11.8%
Other
16%
Yonghan Lee
7.9%
ed
Treasury
stock 7.5%
-d
Horizon
Capital 1.3%
Other 60.1%
Sales
KRW310b
LCD
18%
Semiconductor
55%
Wonik Quartz
6.4%
is
Fidelity Funds
and 2 others
5.0%
pl
Source: Company data, Samsung Securities
Source: Company data, Samsung Securities
Code
Market Cap
P/E (x)
P/B (x)
ay
Table 1. Peer valuations
Company
Solar
11%
EV/EBITDA (x)
ROE (%)
OPM (%)
2011E
2012E
2011E
2012E
2011E
2012E
2011E
2012E
2011E
2012E
7.2
27.8
26.7
12.3
12.9
6.9
13.8
20.0
7.5
12.9
20.8
SFA Engineering
056190 KS
1,002.0
13.6
11.1
3.3
2.6
9.4
SNU Precision
080000 KS
224.3
29.5
10.1
1.9
1.6
16.5
ICD
040910 KS
427.3
9.2
8.4
3.7
2.6
6.6
5.6
Avaco
083930 KS
107.8
11.5
10.0
1.6
1.4
6.6
6.5
AP Systems
054620 KS
292.9
23.1
12.0
4.2
3.0
13.2
7.0
Domestic
et
.n
(USDm)
52.7
36.0
22.3
15.0
14.8
5.2
6.4
21.7
29.3
7.9
11.7
17.4
10.3
2.9
2.2
10.5
6.6
26.2
25.4
11.0
12.9
TEL
8035 JP
10,050.7
20.5
20.9
1.3
1.2
6.2
6.5
6.5
6.7
9.2
9.0
Ulvac
6728 JP
717.6
24.3
22.1
0.6
0.6
7.9
7.4
2.3
1.6
2.4
2.6
Hitachi Hitech
8036 JP
2,973.8
12.9
12.5
0.9
0.8
2.8
2.1
7.1
6.6
4.2
4.3
International
19.2
18.5
0.9
0.9
5.7
5.4
5.3
4.9
5.3
5.3
Overall average
18.1
13.4
2.2
1.7
8.7
6.2
18.4
17.7
8.9
10.1
Source: Bloomberg, Samsung Securities
G
G
43
December 8, 2011
Wonik IPS͑
Income statement
Year-end Dec 31 (KRWb)
Balance sheet
2006
2007
2008
2009
2010
117
80
76
91
173
Current assets
Cost of goods sold
87
56
48
64
119
Gross profit
30
24
28
27
54
Sales
(Gross margin, %)
Year-end Dec 31 (KRWb)
2006
2007
2008
2009
2010
31
35
44
61
134
Cash & equivalents
0
14
21
25
45
Accounts receivable
11
9
6
8
17
Inventories
17
10
11
15
46
3
2
6
11
26
36
46
54
71
348
25.4
29.9
36.7
30.0
31.3
SG&A expenses
17
14
18
22
35
Other current assets
Operating profit
12
10
10
6
19
Fixed assets
10.5
12.3
13.1
6.3
11.0
(1)
0
1
0
1
(Operating margin, %)
Net interest income
Investment assets
16
22
29
47
84
(Equity in affiliated companies)
14
20
27
43
75
14
15
16
17
82
5
6
6
3
170
1
(0)
2
(0)
(0)
Tangible assets
Net equity-method gains
(1)
6
4
9
10
Intangible assets
Other
(1)
(1)
1
0
0
Pre-tax profit
11
15
18
15
30
Net forex-related gains
Taxes
Net profit
(Net margin, %)
Operating net profit*
(Operating net margin, %)
EBITDA
(EBITDA margin, %)
Reported EPS (KRW)
Adjusted EPS (KRW)**
DPS (preferred, KRW)
Dividend payout ratio (%)
3
3
5
12
82
98
132
482
0
4
3
3
Current liabilities
26
18
20
38
75
1.8
21.0
20.6
11.6
Accounts payable
16
10
11
35
46
11
15
12
12
26
9.0
18.4
16.5
13.2
15.3
9
15
13
12
27
8.0
18.3
17.7
13.4
15.4
Short-term debt
2
0
0
0
7
Other current liabilities
7
8
9
3
22
Long-term liabilities
2
2
2
6
52
Bond & long-term debt
0
0
0
0
41
Other long-term liabilities
2
2
2
6
11
28
20
23
44
127
15
17
20
18
32
13.0
21.7
25.9
19.5
18.7
Total liabilities
357
471
376
363
787
Capital stock
15
17
17
17
34
317
467
404
369
795
Capital surplus
24
29
29
29
292
2
16
28
40
67
(1)
(1)
1
2
(38)
0
0
0
0
0.0
0.0
0
0
0
Retained earnings
0
0
0
Other
0.0
0.0
0.0
2006
2007
2008
-d
Cash flow statement
Year-end Dec 31 (KRWb)
1
67
0
ed
DPS (common, KRW)
Total assets
0.0
ol
w.
ww
(Effective tax rate, %)
Other long-term assets
2009
2010
Non-Controlling Interests Equity
Total equity
Net debt
Book value per share (KRW)
0
0
0
0
0
39
61
76
88
356
(14)
(24)
(35)
(14)
1,668
2,095
2,577
2,705
2007
2008
2009
2010
Cash flow from operations
14
14
13
23
Net profit
11
15
12
12
26
Depreciation & amortization
4
3
2
3
4
Year-end Dec 31
2006
Net forex-translation income
0
(0)
(2)
0
0
Growth (%)
1
(6)
(4)
(9)
(10)
37.7
(31.5)
(5.5)
20.5
90.0
18
14
14
8
23
pl
is
4
1,146
RB
(19.5)
0.4
(41.9)
230.5
(4)
0
(1)
15
(18)
0
0
0
0
0
Net profit
Operating net profit*
Net equity-method income
Gross cash flow
Interest Received (Paid)
Sales
Operating profit
Pre-tax profit
0
(0)
0
0
1
(7)
(9)
(18)
(34)
(4)
(2)
(3)
0
(6)
Adjusted EPS**
10
12
10
23
(0)
Ratios
Change in investment assets
1
(0)
(1)
(10)
(21)
ROE (%)
Other
5
(4)
(5)
(8)
(6)
ROA (%)
Cash flow from financing
(20)
6
2
(1)
5
ROIC (%)
Change in debt
(20)
(4)
(0)
0
0
Net debt to equity (%)
Capex
Free cash flow
EBITDA
42.2
18.4
(15.0)
98.1
39.6
(4.8)
(14.5)
120.5
RB
55.9
(8.5)
(8.7)
118.8
RB
(21.0)
(19.2)
(41.6)
267.9
RB
47
(13)
(9)
116
.n
(0)
Cash flow from investments
RB
RB
et
Other
Financial ratios
ay
(-) Change in working capital
6
31.4
29.4
18.2
14.6
11.9
13.3
19.8
13.9
10.4
8.6
28.7
15.7
10.3
5.2
4.7
9.3
(22.0)
(31.2)
(40.0)
(3.9)
Change in equity
0
7
0
0
0
Interest coverage (x)
11.6
Dividends
0
0
0
0
0
Receivables turnover (days)
31.8
46.6
37.2
29.7
Other
(1)
3
3
(1)
5
Payables turnover (days)
56.2
59.2
50.6
92.4
85.0
Change in cash
(9)
13
7
4
20
Inventory turnover (days)
59.0
62.0
52.6
53.8
65.1
Cash at beginning of year
10
1
14
21
25
Valuations (x)
1
14
21
25
45
Cash at end of year
Note: * Excluding one off items
** Fully diluted, excluding one-off items
Source: Company data, Samsung Securities
109.6 2625.5
0.0 1618.2
27.0
P/E
6.8
6.1
4.5
7.3
9.9
P/B
1.9
1.7
0.9
1.0
2.9
EV/EBITDA
4.4
4.4
2.2
3.0
16.4
EV/EBIT
6.0
5.1
2.5
3.7
18.6
Dividend yield (common, %)
0.0
0.0
0.0
0.0
0.0
44
December 8, 2011
Asia Pacific Systems (054620 KS)
Top dog in OLED equipment
Company
Update
G
WHAT’S THE STORY?
Event: A check on equipment manufacturer AP Systems (APS) and its
steady inflow of AMOLED-related front-end equipment orders
Impact: As one of only a few firms in the OLED space that supply a variety
of front-end equipment, APS stands to benefit even more when the OLED
market takes off. According to company guidance, orders for such
equipment will drive sales to KRW400b next year with an operating margin
in the low teens.
ol
w.
ww
Action: Investors should closely monitor APS given its solid growth
prospects and currently attractive valuation.
THE QUICK VIEW
Focused on AMOLED-related equipment: Having started out as a maker of
semiconductor and LCD equipment, Asia Pacific Systems (APS) entered the
AMOLED equipment business in 2008 after successfully developing excimer laser
annealing (ELA) equipment used in front-end processes. It then moved into the glass
encapsulation, laser lift-off (LLO), and laser induced thermal imaging (LITI)
equipment businesses, and currently generates 79% of its sales from AMOLEDrelated equipment (as of end-September).
JungHoon Chang
Analyst
[email protected]
822 2020 7752
ed
-d
Order momentum rising on SMD’s 5.5G expansion: APS is the sole supplier
of core backplane equipment (including ELA), LITI evaporation equipment, and glass
encapsulation equipment—for Samsung Mobile Display (SMD) and its 5.5G lines.
Backed by a solid track record, the firm is now receiving equipment orders for SMD’s
third phase of A2 line expansion, which requires LLO equipment for the production
of flexible displays.
is
„ AT A GLANCE
Not rated
KRW15,300
Bloomberg code
ay
n/a
Current price
Timing of A3 line investment key: In the run up to SMD’s phase-three capacity
ramp-up at its A2 line in 1H12, market attention should be on whether APS can win
another round of large-scale orders for the A3 line and whether thin-film encapsulation
will be chosen as the mainstay of the A2 line after phase three. If SMD goes for thin-film,
glass encapsulation equipment would not be needed, but the void would likely be filled
by orders for LLO equipment. Concerns that client migration to oxide TFT processes
may curb demand for ELA equipment seem premature, in our view.
pl
Target price
054620 KS
Market cap
KRW329.5b/USD292.6m
Shares (float)
21,538,926 (88.2%)
.n
52-week high/low
KRW16,850/KRW6,540
Average daily trading value
(60-day)
1M
6M
12M
+9.3
+18.6
+106.2
+10.1
+11.7
+106.0
Asia Pacific Systems (%)
et
One-year performance
Vs Kosdaq (%pts)
Growth prospects exciting, valuation attractive: According to APS, sales
should come in at KRW240b this year with an operating profit of KRW20b, and
KRW400b next year with an operating margin in the low teens. Considering the
growth potential, APS shares are attractive trading at 12.0x 2012 P/E (based on
Bloomberg consensus). As the company is one of only a few firms in the OLED space
that supply a variety of front-end equipment, it stands to benefit even more when the
OLED market takes off. Investors should closely monitor APS given its solid growth
prospects and currently attractive valuation. Worthy of note, SMD acquired
KRW27.5b-worth of convertible bonds, which could be converted to the equivalent of
11% of common shares outstanding.
KRW 20.90b/
USD 18.56m
„ KEY CHANGES
(KRW)
New
Old
Recommendation
n/a
n/a
Diff (%)
Target price
n/a
n/a
-
2011E EPS
n/a
n/a
-
2012E EPS
n/a
n/a
-
2013E EPS
n/a
n/a
-
„ SAMSUNG vs THE STREET
No of I/B/E/S estimates
10
Target price vs I/B/E/S mean
-
Estimates up/down (4 weeks)
0/0
1-year-fwd EPS vs I/B/E/S mean
Estimates up/down (4 weeks)
I/B/E/S recommendation
Samsung Securities (Korea)
0/1
BUY(2.0)
„ SUMMARY FINANCIAL DATA
Revenue (KRWb)
Net profit (adj) (KRWb)
EPS (adj) (KRW)
EPS (adj) growth (%)
EBITDA margin (%)
ROE (%)
P/E (adj) (x)
P/B (x)
EV/EBITDA (x)
Dividend yield (%)
Source: Company data, Samsung Securities
www.samsungpop.com
2008
20
4
280
RB
28.0
9.5
15.3
2.1
15.2
0.0
2009
92
2
145
(48)
11.1
3.2
31.3
1.9
7.8
0.0
2010
154
(17)
(687)
BR
(2.2)
(26.7)
(15.7)
4.5
(71.2)
0.0
2011E
240
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
December 8, 2011
Asia Pacific Systems͑
Table 1. Key customers and products
Area
Key Customers
Semiconductor equipment
Samsung Electronics
Other Customers
LCD equipment
Samsung Electronics
AMOLED equipment
Samsung Mobile Display
LED equipment
Samsung LED
Products
Rapid Thermal Processing (RTP), Laser Thermal Annealing (LTA)
Hydis, Innolux
One Drop Filling (ODF)
Philips Lumileds
Laser Lift-Off, Wafer Bonder
Excimer Laser Annealing (ELA), Encapsulation, Laser Lift-Off
Source: Company data, Samsung Securities
Chart 1. 2010 sales, by equipment type
Chart 2. 1Q-3Q11 sales, by equipment type
Other
equipment
17%
Other
equipment 4%
LCD
equipment 6%
LCD
equipment
26%
Semiconducto
r equipment
11%
ol
w.
ww
Sales:
KRW153.7b
Sales:
KRW154b
AMOLED
equipment
43%
AMOLED
equipment
79%
Semiconducto
r equipment
14%
Chart 3. Shareholder structure
Kiro Jung and
3 others
10.21%
Chart 4. Quarterly sales vs operating margin
-d
Source: Company data, Samsung Securities
ed
Source: Company data, Samsung Securities
Treasury
stock 0.28%
(%)
15
70
60
is
Partners
Venture
Capital 8.04%
(KRWb)
10
50
5
pl
40
30
ay
20
Other 81.47%
0
10
0
2Q10
(10)
.n
1Q10
(5)
3Q10
4Q10
Sales (LHS)
Code
Market Cap
3Q11
Source: Company data, Samsung Securities
Table 2. Peer valuations
Company
2Q11
Operating margin (RHS)
P/E (x)
P/B (x)
EV/EBITDA (x)
et
Source: Company data, Samsung Securities
1Q11
ROE (%)
OPM (%)
(USDm)
2011E
2012E
2011E
2012E
2011E
2012E
2011E
2012E
2011E
2012E
SFA Engineering
056190 KS
1,002.0
13.6
11.1
3.3
2.6
9.4
7.2
27.8
26.7
12.3
12.9
SNU Precision
080000 KS
224.3
29.5
10.1
1.9
1.6
16.5
6.9
13.8
20.0
7.5
12.9
ICD
040910 KS
427.3
9.2
8.4
3.7
2.6
6.6
5.6
52.7
36.0
22.3
20.8
Avaco
083930 KS
107.8
11.5
10.0
1.6
1.4
6.6
6.5
15.0
14.8
5.2
6.4
Wonik IPS
030530 KS
594.5
19.4
12.0
3.5
2.7
15.8
9.4
12.0
21.1
10.7
12.6
Domestic
16.6
10.3
2.8
2.2
11.0
7.1
24.2
23.7
11.6
13.1
JSW
5631 JP
2,514.0
15.1
11.5
1.5
1.4
4.9
4.5
10.7
13.2
10.1
11.9
Ulvac
6728 JP
717.6
24.3
22.1
0.6
0.6
7.9
7.4
2.3
1.6
2.4
2.6
Hitachi Hitech
8036 JP
2,973.8
12.9
12.5
0.9
0.8
2.8
2.1
7.1
6.6
4.2
4.3
International
17.4
15.4
1.0
0.9
5.2
4.7
6.7
7.1
5.6
6.3
Overall average
16.9
12.2
2.1
1.7
8.8
6.2
17.7
17.5
9.3
10.6
Source: Bloomberg, Samsung Securities
G
46
December 8, 2011
Asia Pacific Systems͑
Income statement
Year-end Dec 31 (KRWb)
Balance sheet
2006
2007
2008
2009
2010
Sales
61
42
20
92
154
Current assets
Cost of goods sold
47
42
13
74
141
Cash & equivalents
Gross profit
(Gross margin, %)
Year-end Dec 31 (KRWb)
Accounts receivable
34
26
21
34
38
Inventories
13
14
20
21
16
15
Other current assets
(1)
Fixed assets
(Operating margin, %)
7.5
(16.4)
4.5
3.9
(0.9)
Net interest income
(0)
(1)
0
(1)
(0)
Net forex-related gains
(0)
0
1
(1)
0
Net equity-method gains
(0)
(1)
(0)
0
(0)
1
0
0
(1)
Pre-tax profit
4
(8)
3
Taxes
1
0
(2)
29.0
(1.9)
(57.6) (391.2)
ol
w.
ww
DPS (preferred, KRW)
Dividend payout ratio (%)
3
4
4
7
8
0
3
3
6
24
28
21
8
(14)
Other long-term assets
3
2
5
2
3
0
(16)
Total assets
86
69
126
134
116
(2)
1
Current liabilities
29
38
52
62
55
(8.9)
Accounts payable
15
10
10
21
14
Short-term debt
Tangible assets
10
25
34
17
21
Other current liabilities
5
4
7
24
20
(14)
Long-term liabilities
6
3
14
4
2
(9.2)
Bond & long-term debt
3
1
11
0
0
2
(17)
2.2
(11.0)
3
(9)
3
3
5.2
(20.3)
15.1
3.2
Other long-term liabilities
7
(5)
6
10
(3)
11.2
(11.6)
28.0
11.1
(2.2)
Total liabilities
231
(834)
380
101
(818)
Capital stock
244
(849)
280
145
(687)
Capital surplus
0.0
0
0
0
Retained earnings
0
0
0
Other
0.0
0.0
0.0
-d
2006
2007
2008
2009
2010
Non-Controlling Interests Equity
Total equity
Net debt
Book value per share (KRW)
is
Cash flow from operations
8
(Equity in affiliated companies)
23
4
Cash flow statement
Year-end Dec 31 (KRWb)
Investment assets
41
20.5
0.0
(5)
(18)
(1)
26
(6)
Net profit
3
(8)
4
2
(17)
Depreciation & amortization
2
2
3
8
12
Net forex-translation income
0
(0)
(0)
0
0
Growth (%)
Net equity-method income
0
1
0
(0)
0
Sales
8
(4)
8
14
13
(14)
(13)
(9)
12
(19)
Interest Received(Paid)
0
0
0
0
0
Net profit
Other
0
0
(0)
0
0
Operating net profit*
(10)
(3)
(12)
1
(2)
EBITDA
(1)
(3)
(1)
(1)
(6)
Adjusted EPS**
Free cash flow
3
4
2
66
66
57
6
5
10
10
11
40
31
45
48
52
5
(4)
13
15
(2)
(0)
(4)
(7)
(5)
(1)
0
0
0
0
0
51
27
61
68
59
11
27
36
(1)
8
3,946
2,638
2,066
2,415
2,397
2006
2007
2008
2009
2010
Pre-tax profit
(6)
(21)
(1)
25
(12)
Change in investment assets
(8)
3
(3)
0
(3)
ROE (%)
Other
(1)
(2)
(8)
2
8
ROA (%)
ROIC (%)
Ratios
45.5
(30.1)
(52.2)
353.2
67.8
139.9
BR
RB
288.3
BR
112.2
BR
RB
(84.2)
BR
94.0
BR
RB
(50.8)
BR
105.9
BR
RB
(4.0)
BR
119.3
BR
RB
1,109.9
BR
80
BR
RB
(48)
BR
et
Capex
2
41
.n
Cash flow from investments
Operating profit
ay
(-) Change in working capital
3
35
Financial ratios
Year-end Dec 31
pl
Gross cash flow
8
42
2
(8)
0
14
55
20
(19.9)
0
5
73
0
3
0
0
27
20
4.9
0
2
31
Intangible assets
ed
DPS (common, KRW)
12
13
4
Adjusted EPS (KRW)**
10
8.6
15
Reported EPS (KRW)
8
18
6
EBITDA
1
19.9
1
(EBITDA margin, %)
73
5
7
7
(Operating net margin, %)
2010
33.7
(7)
Operating net profit*
79
0
5
(Net margin, %)
2009
53
0.5
9
Net profit
2008
41
14
Operating profit
(Effective tax rate, %)
2007
55
23.0
SG&A expenses
Other
2006
6.1
(21.7)
9.5
3.2
(26.7)
4.0
(10.9)
4.3
1.6
(13.6)
(2.2)
Cash flow from financing
7
17
13
(24)
11
5.3
(13.0)
1.5
25.6
Change in debt
7
16
15
(29)
3
Net debt to equity (%)
20.8
100.3
59.5
(1.5)
13.6
Change in equity
0
0
0
3
2
Interest coverage (x)
9.7
(5.0)
4.6
1.1
(16.2)
Dividends
0
0
0
0
0
Receivables turnover (days)
156.2
260.5
424.0
109.6
85.5
Other
0
1
(2)
3
5
Payables turnover (days)
60.2
108.0
182.8
62.3
41.1
Change in cash
(8)
(4)
1
4
3
Inventory turnover (days)
67.3
116.9
304.5
80.3
42.9
Cash at beginning of year
13
5
8
9
13
Valuations (x)
5
1
9
13
16
P/E
17.3
(4.3)
15.3
31.3
(15.7)
P/B
1.1
1.4
2.1
1.9
4.5
EV/EBITDA
9.5
(13.1)
15.2
7.8
(71.2)
14.2
(9.2)
33.7
44.3
(15.9)
0.0
0.0
0.0
0.0
0.0
Cash at end of year
Note: * Excluding one off items
** Fully diluted, excluding one-off items
Source: Company data, Samsung Securities
EV/EBIT
Dividend yield (common, %)
47
December 8, 2011
LTS (138690 KS)
Positive prospects outweigh concerns
Company
Update
G
WHAT’S THE STORY?
Event: A check on laser-powered equipment maker LTS, as some are
concerned that order momentum for its OLED-related cell-sealing
equipment may weaken if customer Samsung Mobile Display (SMD) moves
toward flexible displays.
ol
w.
ww
Impact: LTS has two key positives on the horizon that should outweigh the
negative concerns. First, expectations remain high that it will receive
equipment orders from Chinese panel makers seeking to mass produce
AMOLED panels. Second, even if SMD opts to migrate to flexible displays,
LTS should be able to win orders for laser lift-off (LLO), laser cutting, and
laser bonding equipment.
Action: We believe the positives outweigh the concerns, and see no reason
for the company to make guidance revisions. Trading at 7.7x 2012 P/E, LTS
shares notably remain more attractive than peer stocks.
JungHoon Chang
Analyst
[email protected]
822 2020 7752
THE QUICK VIEW
ed
-d
Sales of AMOLED cell-sealing equipment on the rise: Listed in June, LTS
manufactures cell-sealing equipment used in OLED-related encapsulation processes,
and is the sole supplier to Samsung Mobile Display (SMD). As of end-3Q11,
AMOLED-related laser-driven equipment accounted for 38% of sales, the rest coming
mainly from LED TV light-guide-plate patterning equipment and solar-cell laserdoping equipment.
is
„ AT A GLANCE
Business opportunities solid, even if SMD migrates to flexible displays:
Although LTS boasts considerable knowhow and precious technologies, accumulated
during the process of developing laser equipment, some are worried that order
momentum for its cell sealing equipment could weaken if captive customer SMD
chooses to migrate to flexible displays. We, however, prefer to focus on two key
potential positives. First, expectations remain high that it will receive equipment
orders from Chinese panel makers seeking to mass produce AMOLED panels. Second,
even if SMD opts to migrate to flexible displays, LTS should be able to win orders for
laser lift-off (LLO), laser cutting, and bonding equipment—the latter two respectively
cut thin-film encapsulation layers into cells and bond them to glass substrates.
Not rated
KRW20,550
Bloomberg code
ay
n/a
Current price
pl
Target price
138690 KS
Market cap
KRW148.0b/USD131.4m
Shares (float)
7,200,000 (42.0%)
.n
52-week high/low
KRW21,200/KRW7,760
Average daily trading value
(60-day)
KRW 6.55b/
USD 5.82m
1M
6M
12M
LTS (%)
+51.7
+54.5
n/a
Vs Kosdaq (%pts)
+52.5
+47.6
n/a
Diff (%)
Valuation still attractive: Since our Nov 2 company update “LTS: Enjoying laserpowered growth,” shares in the firm have jumped 81%. We believe the
aforementioned positives outweigh the concerns of some in the market, and see no
likelihood of changes in business conditions warranting guidance revisions. Based on
the company’s KRW150b sales target for 2012 and projected operating margin of
around 15%, both should double y-y. Assuming zero non-operating profit and income
tax at 15%, LTS shares trading at 7.7x 2012 P/E remain more attractive than peer
stocks.
et
One-year performance
„ KEY CHANGES
(KRW)
New
Old
Recommendation
n/a
n/a
Target price
n/a
n/a
2011E EPS
n/a
n/a
-
2012E EPS
n/a
n/a
-
2013E EPS
n/a
n/a
-
-
„ SAMSUNG vs THE STREET
No of I/B/E/S estimates
-
Target price vs I/B/E/S mean
-
Estimates up/down (4 weeks)
0/0
1-year-fwd EPS vs I/B/E/S mean
Estimates up/down (4 weeks)
I/B/E/S recommendation
Samsung Securities (Korea)
0/0
-
„ SUMMARY FINANCIAL DATA
2008
Revenue (KRWb)
11
Net profit (adj) (KRWb)
0.2
EPS (adj) (KRW)
76
EPS (adj) growth (%)
325.1
EBITDA margin (%)
9.3
ROE (%)
4.9
P/E (adj) (x)
0.0
P/B (x)
0.0
EV/EBITDA (x)
6.3
Dividend yield (%)
0.0
Source: Company data, Samsung Securities
www.samsungpop.com
2009
13
0.3
50
(34.4)
10.1
5.2
0.0
0.0
4.0
0.0
2010
50.3
8.2
1,602
3,119.9
20.4
86.0
7.1
4.7
7.7
0.0
2011E
75
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
December 8, 2011
LTS͑
Table 1. Product lineup
AMOLED equipment
LED TV equipment
Solar cell equipment
Laser cell sealing
LGP engraving
Selective emitter laser doping
Laser repair
Acryl cutting
Solar cell scribing
Lift-off
LGP laser serration
Solar cell drilling
Source: Company data, Samsung Securities
Chart 1. Annual sales vs operating margin
Chart 2. 1Q-3Q11 sales, by equipment type
(KRWb)
(%)
80
20
70
18
Other
20%
LGP
engraving
equipment
28%
16
60
14
50
12
10
40
20
10
0
2007
ol
w.
ww
30
2008
2009
Sales (LHS)
2010
8
Sales:
KRW54.8b
Solar cell
equipment
14%
6
4
2
AMOLED cell
sealing
equipment
38%
0
2011E
Operating margin (RHS)
Source: Company data, Samsung Securities
Source: Company data, Samsung Securities
ed
Chart 3. LGP equipment customer breakdown (2010)
-d
Exports
2%
Chart 4. AMOLED equipment customer breakdown (2010)
LS Tech
27%
is
Sales:
KRW11.3b
pl
New Optics
41%
Sales:
KRW33.2b
AUO
30%
ay
Samsung
Mobile
Display
70%
.n
Heesung
Electronics
30%
Source: Company data, Samsung Securities
Source: Company data, Samsung Securities
et
Chart 5. Shareholder structure
Hongjin Park
and 5 others
54%
Other
43%
Treasury
stock
3%
Source: Company data, Samsung Securities
49
December 8, 2011
LTS͑
Table 2. Peer valuations
Company
Code
Market Cap
P/E (x)
P/B (x)
EV/EBITDA (x)
ROE (%)
OPM (%)
(USDm)
2011E
2012E
2011E
2012E
2011E
2012E
2011E
2012E
2011E
054620 KS
291.2
23.1
12.0
4.2
3.0
13.2
7.0
21.7
29.3
7.9
11.7
SFA Engineering 056190 KS
996.5
13.6
11.1
3.3
2.6
9.4
7.2
27.8
26.7
12.3
12.9
SNU Precision
080000 KS
223.0
29.5
10.1
1.9
1.6
16.5
6.9
13.8
20.0
7.5
12.9
ICD
040910 KS
424.9
9.2
8.4
3.7
2.6
6.6
5.6
52.7
36.0
22.3
20,8
EO Technics
039030 KS
293.5
11.7
7.5
1.7
1.4
7.9
4.7
15.7
20.5
18.2
21.0
17.4
9.8
3.0
2.2
10.7
6.3
26.3
26.5
13.6
15.9
AP Systems
Overall average
2012E
Source: Bloomberg, Samsung Securities
G
G
pl
is
-d
ed
ol
w.
ww
ay
et
.n
50
December 8, 2011
LTS͑
Income statement
Year-end Dec 31 (KRWb)
Balance sheet
2007
2008
2009
2010
Year-end Dec 31 (KRWb)
2007
2008
2009
2010
Sales
6.9
11.2
12.8
50.3
Current assets
3.7
5.9
8.8
26.7
Cost of goods sold
5.6
8.2
8.2
35.7
Cash & equivalents
0.2
0.6
1.8
3.2
Gross profit
1.3
3.0
4.6
14.7
Accounts receivable
2.1
2.0
4.1
12.2
5.8
(Gross margin, %)
18.5
26.7
35.8
29.1
Inventories
0.7
2.2
1.6
SG&A expenses
0.9
2.0
2.9
5.2
Other current assets
0.7
1.1
1.3
5.5
Operating profit
0.4
1.0
1.7
9.5
Fixed assets
7.4
9.7
9.5
10.7
0.3
5.6
8.9
13.4
18.8
Investment assets
0.0
0.1
0.0
Net interest income
(0.3)
(0.4)
(0.4)
(0.2)
(Equity in affiliated companies)
0.0
0.0
0.0
0.0
Net forex-related gains
(0.0)
(0.4)
0.0
(0.0)
Tangible assets
6.5
7.6
8.0
8.5
Intangible assets
0.7
2.0
1.5
1.2
Other long-term assets
0.1
0.0
0.0
0.8
(Operating margin, %)
Net equity-method gains
Other
0.0
0.0
0.0
0.0
(0.0)
(0.1)
(1.1)
(0.1)
Pre-tax profit
0.1
0.2
0.3
9.1
Total assets
11.1
15.6
18.2
37.4
Taxes
0.0
0.0
0.0
0.9
Current liabilities
3.1
5.6
7.8
20.4
Net profit
(Net margin, %)
Operating net profit*
Accounts payable
1.9
2.2
2.8
14.1
Short-term debt
0.7
2.6
2.3
1.6
16.2
Other current liabilities
0.5
0.8
2.7
4.7
8.2
Long-term liabilities
5.0
4.8
5.0
3.5
0.0
0.0
0.0
10.2
0.1
0.2
0.3
8.2
0.9
1.8
2.2
0.1
0.4
0.3
ol
w.
ww
(Effective tax rate, %)
(Operating net margin, %)
1.1
3.3
2.0
16.2
Bond & long-term debt
5.0
4.6
4.0
2.8
EBITDA
0.4
1.0
1.3
10.3
Other long-term liabilities
0.1
0.2
0.9
0.6
23.9
(EBITDA margin, %)
Reported EPS (KRW)
Adjusted EPS (KRW)**
6.5
9.3
10.1
20.4
Total liabilities
8.1
10.4
12.8
14.6
40.9
53.9
1,600.7
Capital stock
0.7
0.8
0.8
1.5
17.9
75.9
49.7
1,601.8
Capital surplus
2.2
2.9
2.9
2.1
0.0
0.0
0.0
Retained earnings
0.1
0.3
0.5
9.5
0.0
0.0
0.0
0.0
Other
0.0
1.3
1.3
0.4
Dividend payout ratio (%)
0.0
0.0
0.0
0.0
Non-Controlling Interests Equity
0.0
0.0
0.0
0.0
Total equity
3.0
5.2
5.4
13.5
Cash flow statement
2007
2008
Cash flow from operations
2009
2010
10.5
Net debt
Book value per share (KRW)
is
Year-end Dec 31 (KRWb)
-d
ed
0.0
DPS (preferred, KRW)
DPS (common, KRW)
5
7
5
(2)
465
617
781
2,424
2009
2010
(0.5)
(0.3)
2.0
Net profit
0.1
0.2
0.3
8.2
Financial ratios
Depreciation & amortization
0.1
0.5
0.6
1.0
Year-end Dec 31
Net forex-translation income
0.0
0.2
(0.0)
0.0
Growth (%)
Net equity-method income
0.0
0.0
0.0
0.0
Sales
0.0
62.7
14.2
294.3
0.3
1.1
2.2
9.9
Operating profit
0.0
158.8
70.9
454.8
ay
(-) Change in working capital
pl
Gross cash flow
(1.3)
(0.2)
0.6
Pre-tax profit
0.0
0.0
0.0
0.0
Net profit
Other
0.0
0.0
(0.0)
(0.0)
Operating net profit*
Cash flow from investments
(7.8)
(1.9)
(1.1)
(7.4)
EBITDA
Capex
(3.3)
(0.3)
(0.8)
(2.0)
Adjusted EPS**
(0.5)
1.2
8.5
(0.0)
(0.0)
0.1
(0.3)
ROE (%)
Other
(4.5)
(1.6)
(0.4)
(5.2)
ROA (%)
Cash flow from financing
8.6
2.5
1.1
(1.6)
ROIC (%)
Change in debt
5.6
1.8
(0.3)
(1.6)
Net debt to equity (%)
Ratios
2008
0.0
212.4
36.5
3,204.4
0.0
212.4
36.5
2,868.8
n/a
374.0
(32.2)
3,119.9
0.0
158.8
70.9
398.4
0
325
(34)
3,120
et
(3.8)
Change in investment assets
.n
(0.8)
Interest Received (Paid)
Free cash flow
2007
2.1
4.9
5.2
86.0
0.6
1.5
1.6
29.3
4.7
8.5
16.2
63.0
174.3
127.4
94.4
(17.4)
Change in equity
2.9
0.7
0.0
0.0
Interest coverage (x)
1.2
1.4
1.5
26.9
Dividends
0.0
0.0
0.0
0.0
Receivables turnover (days)
110.2
66.7
87.3
59.0
Other
0.0
0.1
1.5
0.0
Payables turnover (days)
101.9
67.2
71.5
61.4
Change in cash
0.2
0.4
2.0
1.5
Inventory turnover (days)
36.2
47.4
54.6
26.7
Cash at beginning of year
0.0
0.2
0.6
1.8
Valuations (x)
Cash at end of year
0.2
0.6
2.7
3.2
P/E
0.0
0.0
0.0
7.1
P/B
0.0
0.0
0.0
4.7
EV/EBITDA
11.7
6.3
4.0
7.7
EV/EBIT
14.8
11.5
7.5
8.5
0.0
0.0
0.0
0.0
Note: * Excluding one off items
** Fully diluted, excluding one-off items
Source: Company data, Samsung Securities
Dividend yield (common, %)
G
51
December 8, 2011
Advanced Nano Products (121600 KS)
Well positioned for oxide TFT boom
Company
Update
G
WHAT’S THE STORY?
Event: A check on electronic materials maker Advanced Nano Products
(ANP) in the wake of client Solyndra’s bankruptcy.
ol
w.
ww
Impact: As expected, the firm’s solid growth prospects have meant that
shares have rapidly absorbed the impact of a major customer going under.
With all negatives now fully priced in, ANP shares deserve a valuation
premium on expected expansion in the firm’s indium gallium zinc oxide
(IGZO) semiconductor business—sputtering targets made of such material
are increasingly being used in flexible displays and large-sized AMOLED
panels.
Action: ANP warrants attention given such an exciting growth outlook, as
do panel makers and their decisions regarding oxide thin-film transistor
(TFT) adoption.
JungHoon Chang
Analyst
[email protected]
822 2020 7752
THE QUICK VIEW
ed
-d
Maker of next-generation electronic materials: Advanced Nano Products
(ANP) manufactures and sells chemically-processed nanocrystalline materials and
chemical precursors used in making solar cells, displays, and semiconductors. As of
end-3Q11, 27% of the firm’s sales came from its solar cell business, 31% from display
products, and 16% from semiconductors. Transparent conductive oxide (TCO) targets
(primarily used in solar cells and LED screens) accounted for 75% of sales in 2010,
while CMP slurry (supplied to Cabot Microelectronics in powder form) made up 9%.
is
„ AT A GLANCE
Not rated
KRW18,950
Bloomberg code
ay
n/a
Current price
pl
Target price
Insolvency of major customer no longer weighing on shares: ANP shares
have surged 86.7% since we visited the company on Sep 26. As expected, growth
prospects have meant that shares have rapidly absorbed the impact of major
customer Solyndra going under. Also positive, ANP is one of only two firms (Umicore
is the other) boasting cylindrical TCO targets that have passed quality tests overseen
by Applied Materials subsidiary AKT—such targets are more efficient than their
planar counterparts. Despite bearish projections for investment in the display sector,
ANP should continue enjoying steady growth amid rising interest from Chinese LCD
and touch-panel manufacturers.
121600 KS
Market cap
KRW137.1b/USD121.7m
Shares (float)
7,232,222 (48.4%)
.n
52-week high/low
KRW22,350/KRW9,300
Average daily trading value
(60-day)
KRW 2.17b
/USD 1.93m
1M
6M
12M
Advanced Nano Products (%)
-2.6
+8.3
n/a
Vs Kosdaq (%pts)
-1.8
+1.3
n/a
et
One-year performance
Poised to benefit from oxide TFT expansion: ANP deserves a valuation
premium on expected expansion in its indium gallium zinc oxide (IGZO)
semiconductor business—the proportion of oxide thin-film transistors (TFTs) used in
flexible displays and large AMOLED panels is expected to rise. The firm expects sales
to reach KRW33b this year, but has yet to provide guidance for 2012. The shares are
currently trading at 11.5x 2012 P/E and 2x P/B (based on Bloomberg consensus).
„ KEY CHANGES
(KRW)
New
Old
Recommendation
n/a
n/a
Diff (%)
Target price
n/a
n/a
2011E EPS
n/a
n/a
-
2012E EPS
n/a
n/a
-
2013E EPS
n/a
n/a
-
-
„ SAMSUNG vs THE STREET
No of I/B/E/S estimates
4
Target price vs I/B/E/S mean
-
Estimates up/down (4 weeks)
0/0
1-year-fwd EPS vs I/B/E/S mean
Estimates up/down (4 weeks)
I/B/E/S recommendation
Samsung Securities (Korea)
1/0
BUY(1.5)
„ SUMMARY FINANCIAL DATA
2008
Revenue (KRWb)
12
Net profit (adj) (KRWb)
2
EPS (adj) (KRW)
385
EPS (adj) growth (%)
38
EBITDA margin (%)
27.2
ROE (%)
15.6
P/E (adj) (x)
0.0
P/B (x)
0.0
EV/EBITDA (x)
2.1
Dividend yield (%)
0.0
Source: Company data, Samsung Securities
www.samsungpop.com
2009
20
5
894
132
35.4
31.1
0.0
0.0
2.2
0.0
2010
28
7
1,369
53
36.5
31.7
7.4
2.2
8.8
0.0
2011E
33
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
December 8, 2011
Advanced Nano Products͑
IGZO targets to draw demand from AMOLED markets: ANP can leverage its
nanopowder manufacturing technology in three product areas.
x Cylindrical TCO targets: Cylindrical TCO targets are more efficient than planar ones,
and ANP is one of only two firms (Umicore is the other) boasting such targets that have
passed quality tests overseen by Applied Materials subsidiary AKT, which controls 75%
of the global market for sputter equipment. ANP stands to benefit as panel makers
place sputter equipment orders with AKT as part of new capex plans.
x Solar cell silver paste: ANP’s solar cell silver paste, used in crystalline solar cell
electrodes, is currently undergoing tests at equipment companies in Korea, China, and
Taiwan. The product should contribute meaningful sales once it passes qualification
tests.
ol
w.
ww
Oxide targets: IGZO oxide targets are of superior quality to other oxide targets, and
should therefore be increasingly used in flexible displays and large AMOLED panels.
ANP is one of only three firms worldwide (the others are Japan’s Nikko and Ulmat) that
can supply IGZO targets tailored to customer needs. The business should bring ANP
shares a premium once mass production begins, as it will be the only domestic
operation capable of meeting customer demand.
Chart 1. 1Q-3Q11 sales breakdown
Chart 2. Shareholder structure
ed
Other 25.6%
Solar cell
material
27.4%
-d
Sales:
KRW26.7b
Jangwoo Park
and 9 others
44.8%
Other 59.6%
is
Semiconducto
r material
16.0%
pl
Display
material
31.1%
Allianz Global
Investors
5.2%
ESOP 4.4%
ay
Source: Company data, Samsung Securities
Source: Company data, Samsung Securities
Chart 3. Quarterly sales and operating margin
.n
G
(KRWb)
12
(%)
50
et
10
8
40
30
20
6
10
4
0
2
(10)
0
(20)
1Q10
2Q10
3Q10
Sales (LHS)
4Q10
1Q11
2Q11
3Q11
Operating margin (RHS)
Source: Company data, Samsung SecuritiesG
G
53
December 8, 2011
Advanced Nano Products͑
Income statement
Year-end Dec 31 (KRWb)
Balance sheet
2006
2007
2008
2009
2010
Sales
8
9
12
20
28
Current assets
Cost of goods sold
4
4
5
11
14
Gross profit
4
5
7
9
14
(Gross margin, %)
Year-end Dec 31 (KRWb)
2006
2007
2008
2009
2010
10
10
13
23
28
Cash & equivalents
2
1
1
2
3
Accounts receivable
1
1
4
4
8
16
49.8
54.2
55.4
46.8
49.9
Inventories
7
6
8
16
SG&A expenses
2
3
3
4
5
Other current assets
0
1
1
1
2
Operating profit
2
2
4
5
9
Fixed assets
6
7
10
15
21
19.8
21.0
28.9
25.9
31.1
Investment assets
0
0
0
0
0
Net interest income
(0)
(0)
(0)
(1)
(1)
(Equity in affiliated companies)
0
0
0
0
0
Net forex-related gains
(Operating margin, %)
(0)
0
0
0
(0)
Tangible assets
6
7
9
14
19
Net equity-method gains
0
0
0
0
0
Intangible assets
0
0
1
1
1
Other
0
(0)
(2)
0
1
Other long-term assets
0
0
0
0
1
Pre-tax profit
1
2
2
5
8
Total assets
16
17
23
38
49
Taxes
Net profit
(Net margin, %)
Operating net profit*
(Operating net margin, %)
EBITDA
(EBITDA margin, %)
Reported EPS (KRW)
Adjusted EPS (KRW)**
0
0
0
1
Current liabilities
5
5
5
11
11
10.3
4.5
9.6
14.5
Accounts payable
0
0
0
0
0
1
1
2
5
7
Short-term debt
3
3
3
8
5
15.3
15.8
14.0
23.3
24.8
Other current liabilities
2
3
2
3
6
DPS (preferred, KRW)
Dividend payout ratio (%)
1
1
2
5
7
15.3
15.6
15.6
23.1
25.9
3
3
3
7
10
32.5
32.4
27.2
35.4
36.5
10
13
5
9
12
Other long-term liabilities
0
0
1
1
1
Total liabilities
9
7
11
20
23
347
900
1,311
Capital stock
2
2
2
3
3
385
894
1,369
Capital surplus
3
5
6
5
7
17
0
0
0
0
0.0
0.0
0
0
0
Retained earnings
2
3
5
10
0
0
0
Other
0
0
0
0
0
0.0
0.0
0.0
Non-Controlling Interests Equity
0
0
0
0
0
2007
2008
2009
(2)
3
0
(2)
2010
Total equity
7
9
12
17
26
Net debt
6
4
7
16
16
1,347
1,840
2,313
3,231
4,676
2006
2007
2008
2009
2010
39.3
Book value per share (KRW)
is
2006
7
Financial ratios
Year-end Dec 31
(0)
0
Growth (%)
0
0
0
Sales
4
6
9
Operating profit
(0)
(3)
(8)
(2)
2
5
1
1
1
Net forex-translation income
0
(0)
0
Net equity-method income
0
0
2
3
(4)
Pre-tax profit
ay
1
1
pl
7
1
1
Depreciation & amortization
(-) Change in working capital
6
2
283
Net profit
Gross cash flow
2
4
280
-d
Cash flow from operations
4
Bond & long-term debt
284
Cash flow statement
Year-end Dec 31 (KRWb)
Long-term liabilities
284
ed
DPS (common, KRW)
0
12.4
ol
w.
ww
(Effective tax rate, %)
0
0
0
0
0
Net profit
Other
0
(0)
0
0
0
Operating net profit*
Cash flow from investments
(1)
(3)
(4)
(6)
(8)
EBITDA
Capex
(1)
(2)
(3)
(6)
(7)
Adjusted EPS**
(3)
1
(2)
(8)
(0)
Ratios
Free cash flow
0
0
0
0
0
ROE (%)
Other
0
(1)
(1)
(1)
(1)
ROA (%)
40.4
63.4
93.3
46.3
67.7
33.8
7.2
17.0
186.3
56.6
22.7
9.7
24.6
171.1
48.2
22.5
8.3
39.7
142.6
55.7
91.6
15.4
105.7
38.5
58.6
17
(2)
38
132
53
et
Change in investment assets
6.3
12.8
.n
Interest Received(Paid)
30.4
109.0
23.0
17.0
15.6
31.1
31.7
8.7
8.3
8.6
15.3
15.8
17.7
Cash flow from financing
3
(0)
4
8
3
ROIC (%)
11.0
11.8
17.3
14.1
Change in debt
2
(2)
4
8
1
Net debt to equity (%)
91.1
46.3
56.2
89.3
61.1
Change in equity
1
1
0
0
2
Interest coverage (x)
4.8
5.0
5.1
9.8
12.4
80.9
0
0
0
0
0
Receivables turnover (days)
47.1
52.1
74.2
72.5
(0)
(0)
0
0
0
Payables turnover (days)
40.3
9.4
3.6
4.4
2.8
Change in cash
0
(1)
0
0
2
Inventory turnover (days)
220.4
267.6
208.2
218.3
208.5
Cash at beginning of year
2
2
1
2
2
Valuations (x)
Cash at end of year
2
1
2
2
3
P/E
0.0
0.0
0.0
0.0
7.4
P/B
0.0
0.0
0.0
0.0
2.2
EV/EBITDA
2.3
1.6
2.1
2.2
8.8
Dividends
Other
Note: * Excluding one-off items
** Fully diluted, excluding one-off items
Source: Company data, Samsung Securities
EV/EBIT
3.4
2.4
3.2
2.7
10.2
Dividend yield (common, %)
0.0
0.0
0.0
0.0
0.0
54
December 8, 2011
AMOLED͑
„ Compliance Notice
- As of Dec 7, 2011, Samsung Securities shared group affiliation with Samsung SDI.
- As of Dec 7, 2011, Samsung Securities had issued equity-linked warrants with shares in LG Display as underlying assets.
- During the three months prior to Dec 7, 2011, Samsung Securities had not participated in any securities issuance (including DRs, CBs, and IPOs) by companies
covered in this report.
- As of Dec 7, 2011, Samsung Securities' holdings of shares and debt instruments convertible into shares of each company covered in this report would not, if such
debt instruments were converted, exceed 1% of each company's outstanding shares.
- As of Dec 7, 2011, the covering analyst(s) did not own any shares, or debt instruments convertible into shares, of any company covered in this report.
- This material has not been distributed to institutional investors or other third parties prior to its publication.
- This report has been prepared without any undue external influence or interference, and accurately reflects the views of the analyst(s) covering the company or
companies herein.
- All material presented in this report, unless specifically indicated otherwise, is under copyright to Samsung Securities.
- Neither the material nor its content (including copies) may be altered in any form, or by any means transmitted, copied, or distributed to another party, without prior
express written permission from Samsung Securities.
- This memorandum is based upon information available to the public. While we have taken all reasonable care to ensure its reliability, we do not guarantee its
accuracy or completeness. This memorandum is not intended to be an offer, or a solicitation of any offer, to buy or sell the securities mentioned herein. Samsung
Securities shall not be liable whatsoever for any loss, direct or consequential, arising from the use of this memorandum or its contents. Statements made regarding
affiliates of Samsung Securities are also based upon publicly available information and do not necessarily represent the views of management at such affiliates.
„ Target price changes in past two years
ol
w.
ww
Samsung SDI
Duksan Hi-Metal
(KRW)
250,000
200,000
150,000
30,000
25,000
20,000
ed
100,000
50,000
Jun 10
Dec 10
Jun 11
15,000
10,000
-d
0
Dec 09
5,000
0
Dec 11
Dec 09
Jun 10
Jun 11
Dec 11
pl
80,000
70,000
ay
60,000
50,000
.n
40,000
30,000
20,000
et
10,000
0
Dec 09
Dec 10
is
SFA Engineering
(KRW)
(KRW)
35,000
Jun 10
Dec 10
Jun 11
Dec 11
„ Rating changes in past two years
Samsung SDI
Date
Recommendation
Target price (KRW)
2009/12/14 2010/7/28
10/21
2011/1/13
4/29
9/15
12/8
HOLD
HOLD
BUY
BUY
BUY
BUY
BUY
165,000
174,000
174,000
200,000
210,000
150,000
170,000
10/21
2011/1/13
2/15
12/8
BUY
BUY
BUY
not rated
54,000
70,000
74,000
n/a
Duksan Hi-Metal
Date
Recommendation
Target price (KRW)
2011/1/13
8/16
12/8
BUYఒఒఒ
BUY
BUYఒఒఒ
31,000
33,000
36,000
3/10
5/13
SFA Engineering
Date
Recommendation
Target price (KRW)
2010/2/12
BUY
38,000
BUYఒ఑఑ BUYఒ఑఑
38,000
70,000
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December 8, 2011
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„ Target price changes in past two years
Wonik IPS
AP Systems
(KRW)
(KRW)
18,000
12,000
16,000
10,000
14,000
8,000
12,000
10,000
6,000
8,000
4,000
6,000
4,000
2,000
2,000
0
LTS
(KRW)
35,000
30,000
25,000
20,000
0
Jun 10
Dec 10
Jun 11
Dec 11
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Dec 09
0
15,000
10,000
Dec 11
„ Rating changes in past two years
Dec 11
20,000
5,000
0
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Jun 11
Jun 11
(KRW)
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5,000
Dec 10
25,000
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10,000
Jun 10
Advanced Nano Products
15,000
Dec 09
Feb 11
Aug 11
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Wonik IPS
Date
12/8
Recommendation
not rated
Target price (KRW)
n/a
AP Systems
Date
12/8
Recommendation
not rated
Target price (KRW)
n/a
LTS
Date
12/8
Recommendation
not rated
Target price (KRW)
n/a
Advanced Nano Products
Date
12/8
Recommendation
not rated
Target price (KRW)
n/a
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Samsung Securities uses the following investment ratings.
Company
BUYఒఒఒ
BUYG
HOLD
SELL
SELLఒఒఒ
Expected to increase in value by 30% or more within 12 months and is highly attractive within sector
Expected to increase in value by 10% or more within 12 months
Expected to increase/decrease in value by less than 10% within 12 months
Expected to decrease in value by 10% or more within 12 months
Expected to decrease in value by 30% or more within 12 months
ఐ On Oct 21, 2010, Samsung Securities changed the ratings in its five-tier system
to BUYఒఒఒ, BUY, HOLD, SELL, and SELLఒఒఒ from BUYఒఒఒ, BUYఒఒ఑, BUYఒ఑఑, HOLD, and SELL.
Industry
OVERWEIGHT Expected to outperform market by 5% or more within 12 months
NEUTRAL
Expected to outperform/underperform market by less than 5% within 12 months
UNDERWEIGHT Expected to underperform market by 5% or more within 12 months
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December 8, 2011
AMOLED͑
Global Disclosures & Disclaimers
General
This research report is for information purposes only. It is not and should not be construed as an offer or solicitation of an offer to purchase or sell any
securities or other financial instruments or to participate in any trading strategy. This report does not provide individually tailored investment advice. This
report does not take into account individual client circumstances, objectives, or needs and is not intended as recommendations of particular securities,
financial instruments or strategies to any particular client. The securities and other financial instruments discussed in this report may not be suitable for all
investors. The recipient of this report must make its own independent decisions regarding any securities or financial instruments mentioned herein and
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This report may not be altered, reproduced, distributed, transmitted or published in whole or in part for any purpose. References to "Samsung Securities" are
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Samsung Securities and/or other affiliated companies, its and their directors, officers, representatives, or employees may have long or short positions in any of
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sell, at any time, such securities or other financial instruments in the open market or otherwise, as either a principal or agent. Any pricing of securities or other
financial instrument contained herein is as of the close of market for such day, unless otherwise stated. Opinions and estimates contained herein constitute our
judgment as of the date of this report and are subject to change without notice.
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The information provided in this report is provided "AS IS". Although the information contained herein has been obtained from sources believed to be
reliable, no representation or warranty, either expressed or implied, is provided by Samsung Securities in relation to the accuracy, completeness or reliability of
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Additional information is available upon request.
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Securities research is prepared, issued and exclusively distributed by Samsung Securities Co., Ltd., an organization licensed with the Financial Supervisory
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applicable U.S. rules and regulations and may not be subject to U.S. restrictions on communications with covered companies, public appearances, and trading
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For reports to be distributed to UK:
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This report is not an invitation nor is it intended to be an inducement to engage in investment activity for the purpose of section 21 of the Financial Services
and Markets Act 2000 of the United Kingdom ("FSMA"). To the extent that this report does constitute such an invitation or inducement, it is directed only at (i)
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Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the
compensation of such analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research report.
The analyst(s) principally responsible for the preparation of this research report receives compensation based on determination by research management and
senior management (not including investment banking), based on the overall revenues, including investment banking revenues of Samsung Securities Co., Ltd.
and its related entities and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations.
Copyright ” 2010 Samsung Securities Co., Ltd.. All rights reserved. This report or any portion hereof may not be reprinted, sold or redistributed without the prior written
consent of Samsung Securities America Inc.
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„10th Fl., Samsung Main
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Tel: 822 2020 8051G/ Fax: 822 2020 7804G
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For more information, please call our sales representatives:
LONDON
NEW YORK
HONG KONG
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TOKYO
Samsung Securities
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