[Featured Stock] Dong-A Eltec Enters Micro OLED Market in the Metaverse Era... Undervalued Amid Profitability Recovery

[Asia Economy Reporter Park Hyungsoo] Dong-A Eltek is showing strong performance. Securities firms' analyses expecting benefits from the expansion of the organic light-emitting diode (OLED) application market and the advent of the metaverse era appear to have influenced the stock price. The sharp rise of Opticis and KOSYS has also increased interest in Dong-A Eltek.

As of 12:05 PM on the 22nd, Dong-A Eltek is trading at 11,900 KRW, up 19.0% from the previous day.

Park Jongseon, a researcher at Eugene Investment & Securities, explained, "OLED adoption is expected to expand not only in Apple iPhones but also in iPads," adding, "Samsung's OLED notebook products are also expanding."

He continued, "The increasing proportion of smartphones adopting flexible and foldable displays is also a positive factor for OLED demand," and added, "Display automatic inspection equipment and OLED manufacturing deposition equipment-related sales are expected to grow by over 30% compared to the previous year."

Furthermore, he emphasized, "As we enter the metaverse era, the micro display market for augmented reality (AR) and virtual reality (VR) content will blossom," adding, "The subsidiary Sunic System has already developed the world's first micro OLED equipment and continues to supply it for research and development purposes."

Researcher Park analyzed, "Last year, micro OLED equipment for mass production was supplied to China's BOE," and noted, "BOE is known to plan commercializing display panels adopting micro OLED in the second half of the year."

He explained, "Demand for micro OLED manufacturing equipment from display panel manufacturers is expected to form in earnest after the second half of the year," and "this will contribute to Dong-A Eltek's performance growth in the mid to long term."

Researcher Park analyzed, "Dong-A Eltek's sales are expected to increase by 29.6% this year, but operating profit is expected to remain at last year's level," attributing this to "costs for new product development and temporary expenses reflecting a first-quarter deficit."

He said, "Profitability will gradually improve with the full-scale sales in the second half of this year," and added, "Starting from the second half of this year, profitability is expected to recover, and the price-to-earnings ratio (PER) based on the expected 2022 performance is estimated at 6.5 times."