Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

Philoptics IPO Part 2 - Bookbuilding Results & Sunnier Sales Guidance

Equity Capital Markets

Philoptics Co Ltd. / Equity Capital Markets

What would be the hottest keyword in the global tech world so far this year? For me, I'd pick OLED. Samsung's GS8 wouldn't be so impressive without fascinating infinity display screen. Apple is now almost guaranteed to employ flexible OLED panels for the upcoming iPhone 8. Whether you want to believe or not, Samsung is the only "decent" flexible OLED panel makers, and already many of the suppliers in Samsung's OLED supply chain have outperformed the market this year. Well, is there any OLED stock left for us to invest at this point? Unfortunately, it'd be extremely hard to find one. But there will be one more in the stock market soon. It is called <a href="https://www.smartkarma.com/entities/24114" target="_blank" data-smartkarma-citation="entities:24114:1">Philoptics Co. Ltd. (161580 KS)</a>, which I'd like to introduce in this insight.Philoptics was founded in 2008 by a former Samsung senior optics engineer named Han Ki-su (he had worked at <a href="https://www.smartkarma.com/entities/503" target="_blank" data-smartkarma-citation="entities:503:1">Samsung SDI Co Ltd (006400 KS)</a> for nearly 10 years from 1994 to 2004. Han is still serving as the company's CEO and has successfully assembled and still keeping a group of elite optics engineers, most of whom have prestigious business (mostly Samsung) and educational backgrounds. In fact, most of its key members have worked at Samsung SDI and studied at the country's top engineering schools. Because of his close connection to Samsung, Philoptics was able to enter Samsung's inner cycle of suppliers immediately after the foundation. The company had first focused on exposure machines, but now nearly 90% of its sales are coming from OLED laser processing machines, which are basically used to cut flexible OLED films. This is a critical part of flexible OLED production process, and Philoptics is now responsible for 62% of all flexible OLED laser cutting machines and laser lift off machines used in <a href="https://www.smartkarma.com/entities/191" target="_blank" data-smartkarma-citation="entities:191:1">Samsung Electronics Co Ltd (005930 KS)</a> (Samsung Display). <a href="https://www.smartkarma.com/entities/24087" target="_blank" data-smartkarma-citation="entities:24087:1">Advanced Process Systems Corporation (265520 KS)</a> and <a href="https://www.smartkarma.com/entities/5314" target="_blank" data-smartkarma-citation="entities:5314:1">Eo Technics Co Ltd (039030 KS)</a> are responsible for the remaining 38%.Until recently, the prevalent technique to cut OLED panel glasses was CO2 laser cutting technique. But it wasn't really suitable for cutting flexible OLED panel films. For flexible OLED panels, we should cut PI films instead of glasses. So, we needed a more advanced technique. Philoptics saw this business opportunity and successfully capitalized on it by developing its proprietary laser cutting technique using "short pulse laser". Samsung Display was obviously impressed by Philoptics' short pulse laser technique which had consistently proved to be more accurate and less error prone. As a result, Philoptics has become Samsung's first-tier supplier in the category of laser cutting machine in a relatively short-term.

What would be the hottest keyword in the global tech world so far this year? For me, I'd pick OLED. Samsung's GS8 wouldn't be so impressive without fascinating infinity display screen. Apple is now almost guaranteed to employ flexible OLED panels for the upcoming iPhone 8. Whether you want to believe or not, Samsung is the only "decent" flexible OLED panel makers, and already many of the suppliers in Samsung's OLED supply chain have outperformed the market this year. Well, is there any OLED stock left for us to invest at this point? Unfortunately, it'd be extremely hard to find one. But there will be one more in the stock market soon. It is called Philoptics Co. Ltd. (161580 KS), which I'd like to introduce in this insight.Philoptics was founded in 2008 by a former Samsung senior optics engineer named Han Ki-su (he had worked at Samsung SDI Co Ltd (006400 KS) for nearly 10 years from 1994 to 2004. Han is still serving as the company's CEO and has successfully assembled and still keeping a group of elite optics engineers, most of whom have prestigious business (mostly Samsung) and educational backgrounds. In fact, most of its key members have worked at Samsung SDI and studied at the country's top engineering schools. Because of his close connection to Samsung, Philoptics was able to enter Samsung's inner cycle of suppliers immediately after the foundation. The company had first focused on exposure machines, but now nearly 90% of its sales are coming from OLED laser processing machines, which are basically used to cut flexible OLED films. This is a critical part of flexible OLED production process, and Philoptics is now responsible for 62% of all flexible OLED laser cutting machines and laser lift off machines used in Samsung Electronics Co Ltd (005930 KS) (Samsung Display). Advanced Process Systems Corporation (265520 KS) and Eo Technics Co Ltd (039030 KS) are responsible for the remaining 38%.Until recently, the prevalent technique to cut OLED panel glasses was CO2 laser cutting technique. But it wasn't really suitable for cutting flexible OLED panel films. For flexible OLED panels, we should cut PI films instead of glasses. So, we needed a more advanced technique. Philoptics saw this business opportunity and successfully capitalized on it by developing its proprietary laser cutting technique using "short pulse laser". Samsung Display was obviously impressed by Philoptics' short pulse laser technique which had consistently proved to be more accurate and less error prone. As a result, Philoptics has become Samsung's first-tier supplier in the category of laser cutting machine in a relatively short-term.

Philoptics IPO Part 1 - Schedule, Financials & Valuation