Samsung-LG OLED Alliance Imminent: "Should We Keep an Eye on Enox, PI Advanced Materials, and LX Semicon?"

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[Asia Economy Reporter Myung-hwan Lee] As the OLED alliance between Samsung Electronics and LG Display (LGD) is reportedly imminent, related beneficiary stocks are stirring. Securities firms have pointed to InnoX Advanced Materials and PI Advanced Materials as stocks to watch.

According to Hana Financial Investment on the 28th, since the possibility of the alliance between the two companies was raised, beneficiary stocks such as InnoX Advanced Materials surged sharply by 15.7% and LX Semicon by 12.5% over the past week.

In the display industry, rumors are circulating that LGD’s supply of OLED TV panels to Samsung Electronics is imminent. LGD President Jung Ho-young also did not deny the possibility of supplying OLED to Samsung Electronics when asked by reporters immediately after the regular shareholders' meeting on the 23rd, saying, "If conditions are met and both sides can win-win, the possibility is open."

Hana Financial Investment identified InnoX Advanced Materials, PI Advanced Materials, and LX Semicon as beneficiary stocks related to LGD’s panel supply to Samsung Electronics.

InnoX Advanced Materials’ OLED TV sales account for 38%. Hana Financial Investment analyzed that the profit contribution is estimated to be not significantly different from the sales proportion, indicating that the benefit from LGD’s increased shipments of OLED TV panels will be substantial. InnoX Advanced Materials has also seen a significant rise in operating profit margin as high-margin sales such as OLED mobile protective films for Samsung Display have continuously increased. Researcher Kim Hyun-soo of Hana Financial Investment stated, "(InnoX Advanced Materials) is currently undervalued as of 2022, and considering the recent rise in operating profit margin, there is significant potential for stock price revaluation."

PI Advanced Materials is also expected to benefit. Researcher Kim said, "Taiwanese polyimide (PI) film company 'Taimide' rose 22.8% over the past week on expectations of strong performance. Considering this, PI Advanced Materials should be closely watched this week."

Hana Financial Investment also analyzed that LX Semicon has a high possibility of benefiting. OLED TV sales account for 12% of this company’s revenue. Researcher Kim noted, "While demand slowdown in the LCD sector, which accounts for half of sales, and the possibility of downward revisions in earnings estimates due to foundry shortages should be kept in mind, the downside risk to the stock price from earnings estimate revisions is not expected to be significant."

Meanwhile, it has been reported that the Ministry of Trade, Industry and Energy’s briefing to the Presidential Transition Committee includes support measures for the domestic display industry. Accordingly, the display industry is likely to be included in the 'National Core Strategic Industry Special Act (Semiconductor Special Act),' which contains support measures such as expedited permit processing, infrastructure construction, tax credits, and priority reflection in government R&D budget allocation. The Semiconductor Special Act passed the National Assembly plenary session in January and was approved at the Cabinet meeting.