AP Systems to benefit from increasing investments in flexible OLED

This is the 25th in a series of articles analyzing major companies by market capitalization traded on the tech-heavy Kosdaq market. -- Ed 


While pharmaceutical shares remained bearish last week, semiconductor and panel-related firms had a bullish week as foreign investors snatched up their shares on expectations about a growing OLED market. 

AP Systems, a Dongtan-based equipment provider for Samsung Display, was one of them, who raised about 700 million won thanks to foreign buyers on Friday. 

The Kosdaq-listed firm is the country’s first developer of rapid thermal process equipment, known as RTP, an essential piece of equipment for the chipmaking process. 

Established in 1994 as a control software company, it now provides equipment not only for the semiconductor industry, but also flat panel display and solar cell makers. The company, in particular, provides excimer laser annealing system and laser lift-off equipment specialized for flexible OLED panels. 

The firm is forecast to announce surprise earnings in the third quarter, according to market observers who estimate about 10 billion won in operating profit. Its annual operating profit is expected to hit nearly 28 billion won, the largest ever. 

“Considering the improving semiconductor market, it is a given fact that AP Systems will grab the biggest earnings this year,” said Ko Jeong-woo, an analyst at NH Investment & Securities. “Adding to that, expansion of flexible OLED production lines by display manufacturers is also a favorable factor for the company.” 

AP Systems is currently expanding its production line for equipment for OLED panels in accordance with the expected increase in demand. The construction is slated for completion in December. 

In September, the company announced it won about 30.4 billion won worth of orders from Samsung Display, which will be reflected in the company’s fourth-quarter performance. Samsung Display is aggressively expanding its investment in the OLED business with an aim to raise its monthly production capacity to 180,000 panels by 2018. 

“Not only local display makers but also global players are expected to ramp up investment in OLED and large-size LCD panels this and next year, the firm is forecast to show the best performance until next year,” said a recent report by Eugene Investment & Securities. 

The securities brokerage maintained its buy position for the firm and kept the target price at 29,000 won for the next 12 months. 

AP Systems shares were traded at 24,500 won on Friday, up 0.41 percent from the previous trading session. 

“The OLED equipment market has higher entry barriers than the LCD equipment market,” said Kim Byoung-ki, an analyst at Hanwha Investment & Securities. “As the global flexible OLED market gets bigger, AP Systems is highly likely to take up major deals from China and other countries.”
 
The analyst raised his target price for the company to 35,000 won.
Indeed, AP Systems’ China business is actually thriving. It is being recognized in the market since 2015 as it signed deals with leading Chinese display firms such as EverDisplay and Tianma.

By Song Su-hyun (song@heraldcorp.com)