[Click eStock] Deoksan Neolux Supplies Materials for Samsung 'Z Fold3'... Target Price Up 33%

[Asia Economy Reporter Ji Yeon-jin] Yuanta Securities announced on the 6th that it raised the target price of Duksan Neolux by 33%, from the previous 75,000 KRW to 100,000 KRW, reflecting the supply of the display material Black PDL developed by the company to Samsung Electronics' smartphone 'Z Fold3'.

Duksan Neolux started supplying Black PDL to Samsung Display from the third quarter of this year. Black PDL is known as a material that can replace both the existing transparent PDL and polarizer, significantly improving optical efficiency and power consumption. It was first applied to the Galaxy Z Fold3 and is expected to be expanded to other models in the future.

The existing transparent PDL is exclusively supplied by Toray (Japan), but considering the trend of domestic material localization and its excellent properties, it is expected to be rapidly replaced by Black PDL. This creates a new potential market worth about 200 billion KRW annually.

Although Black PDL sales this year are expected to be less than 10 billion KRW, they are projected to surge to over 40 billion KRW next year (assuming adoption in the S series).

Due to the seasonal peak effect in the third quarter, sales are expected to increase by 30% year-on-year to 56.3 billion KRW, and operating profit is expected to jump 53.4% to 15.6 billion KRW. Strong sales of new flagship smartphone models (iPhone 13 series, Galaxy Z Fold and Flip3) are likely to exceed market expectations, especially driven by strong demand for the Z Fold and Flip3, with production volume expected to exceed 7 million units. This far surpasses the decrease caused by the discontinuation of the Note series.

Additionally, the contribution of new applications beyond smartphones is expected to continue expanding. Materials for notebook PCs, which began in earnest from the second quarter, are inevitably expanding supply due to customers' upward shipment revisions, and the supply effect for Nintendo Switch has also started to be reflected.

Kim Kwang-jin, a researcher at Yuanta Securities, said, "Reflecting the front-end market expansion effect following the start of Black PDL supply, we revised this year's and next year's earnings upward by 4% and 19%, respectively," emphasizing that "the expansion from existing light-emitting materials to non-light-emitting materials signifies entering a new growth phase and provides a reasonable basis for multiple expansions."