Julian Yoon

Equity Bottom-Up

Due to the Dupont litigation (related to theft of trade secrets for Aramid / Kevlar), which lasted from 2012 to 2015, company had been capital constrained with limited financial flexibility to reinvest back into its businesses.As the litigation was settled in April 2015, company has been increasing its investments in R&amp;D (film for foldable OLED) and capex for capacity expansions in its industrial material business (which currently accounts for over 50% of consolidated operating profit).  Overall growth and margins should improve beginning in 2018 when current capex investments should translate into greater capacity.  Company should re-rate given improving outlook in its core businesses and commercialization of foldable OLED.   Increased investments by company and improving business trends support current valuation even if foldable OLED story does not play out.

Due to the Dupont litigation (related to theft of trade secrets for Aramid / Kevlar), which lasted from 2012 to 2015, company had been capital constrained with limited financial flexibility to reinvest back into its businesses.As the litigation was settled in April 2015, company has been increasing its investments in R&amp;D (film for foldable OLED) and capex for capacity expansions in its industrial material business (which currently accounts for over 50% of consolidated operating profit).  Overall growth and margins should improve beginning in 2018 when current capex investments should translate into greater capacity.  Company should re-rate given improving outlook in its core businesses and commercialization of foldable OLED.   Increased investments by company and improving business trends support current valuation even if foldable OLED story does not play out.  

Kolon Industries: Core Businesses Poised for Growth Plus Upside from Foldable OLED Commercialization