[Click e Stocks] SK Materials OLED Material Mass Production Expected to Accelerate

[Asia Economy Reporter Hwang Junho] Kiwoom Securities raised the target price of SK Materials to 430,000 KRW on the 18th. Although the stock price had been under prolonged adjustment due to fatigue from last year's price increase and the off-season effect in the first quarter of this year, the full-scale mass production of OLED materials and semiconductor photoresists, along with the increase in demand for semiconductor specialty gases, are expected to be the turning points for the stock price to rise, leading to the upward revision of the target price.

Kiwoom Securities expects sales in the OLED materials sector to surge from 30 billion KRW this year to 100 billion KRW in 2023. Mass production of OLED materials and semiconductor photoresists is expected to begin in earnest from the second quarter of this year. OLED materials will be supplied by the consolidated subsidiary SKM JNC to LG Display and Samsung Display. Accordingly, benefits are expected from LG Display's OLED expansion in the second half of this year and Samsung Display's mid- to long-term QD-OLED investment expansion. The supplied products are also expected to diversify, starting with blue dopant, followed by blue host and HTL, among others.

An increase in demand and price for semiconductor specialty gases, including NF3, is also anticipated. In the case of NF3, operating profit margins reached around 40% during the supply shortage period of 2015-2016, but profitability (estimated OPM of 9% in 2020) sharply declined due to 'slowing demand growth' and 'excessive competition among suppliers.' However, in the second half of this year, with aggressive expansions by NAND flash and foundry companies resuming, as well as additional expansions in domestic OLED and Chinese LCD sectors, NF3 prices are expected to rise and profitability to improve significantly.