[Click eStock] ICD to Benefit Fully Next Year as Display Investment Resumes

[Asia Economy Reporter Lee Seon-ae] Korea Investment & Securities identified ICD as the stock that will benefit the most next year when display investments resume. Jeonghwan Kim, a researcher at Korea Investment & Securities, said, "We expect ICD's stock price to strengthen in the first half of next year due to strong order momentum," emphasizing, "Next year's order amount will exceed 300 billion KRW (more than double this year) by combining logistics equipment for deposition machines and equipment orders targeting China." However, he did not provide an investment opinion or target price. He noted, "The order backlog at the end of Q2 decreased to 59.4 billion KRW, and excluding logistics equipment for deposition machines in the second half, orders and profits this year are expected to slow down following last year. However, from the first half of next year, orders are expected to increase due to the resumption of panel investments, and profits will rebound from the second half."

ICD is a display equipment company with customers including Samsung Display, LG Display, OLED deposition machine manufacturer Canon Tokki, and Chinese panel companies. It supplies dry etching equipment to panel companies and logistics equipment to deposition machine manufacturers. Due to the continued slowdown in the display market in the second half of this year, the timing for panel companies to resume investments has been postponed to next year. However, since Korean panel companies' North American clients aim to mass-produce medium-to-large OLEDs for tablets and notebook PCs and displays for AR/VR devices in 2024, equipment investments for this will begin by the first half of 2023 at the latest.

It is estimated that domestic panel companies hold over 50% market share in dry etching equipment for display manufacturing. They have continuously replaced equipment from the Japanese competitor TEL (Tokyo Electron), while the market shares of Invenia and Wonik IPS have declined. A significant increase in orders is expected next year when two domestic display panel companies simultaneously resume investments. This is thanks to Samsung Display's first investment in 8.6-generation IT OLED, additional investment in 8.5-generation QD-OLED, and LG Display's additional investments in medium-to-large RGB and White OLEDs for IT and TV. The order amount for etching equipment related to this is estimated to be about 200 billion KRW next year. OLED technology is diversifying by combining not only RGB and White but also QD and OLEDoS (silicon wafer-based), and substrate sizes are also diversifying from ultra-large to ultra-small. Companies like ICD, which have an advantage in specific equipment groups (plasma equipment for displays), can supply equipment to various lines, benefiting from this trend. They are also expected to supply equipment for domestic AR/VR Micro OLED development and semiconductor applications.