A Polish company is building a technology hub. Analysts see significant potential.

• Erste analysts see a potential for a stock market valuation increase of around 50% in the case of Noctiluca, a manufacturer of chemical compounds used in the construction of OLED displays.
• They point out that Noctiluca is building the first technology hub in Europe dedicated to OLED materials.

• The aim is to significantly accelerate commercialization processes and increase the number of implementations of innovative OLED materials.

Erste Group analysts have launched their recommendations for Noctiluca with a "buy" order, with a target price of PLN 154.84 per share. On Tuesday, the technology company's share price was approximately PLN 103. This translates to a valuation of just over PLN 160 million. Should Erste achieve its target price, market capitalization would reach approximately PLN 245 million.

Noctiluca is a Polish manufacturer of specialized organic chemical compounds. These primarily include emitters and functional materials for OLED displays. According to the report's authors, in 2021, 25% of the display market was OLED, while by 2026 this will be approximately 41%. Ultimately, this share is expected to exceed 70% by 2030.

A technological hub dedicated to OLED materials

Noctiluca is building the first technology hub in Europe dedicated to OLED materials, actively developing cooperation with over 20 research teams from universities and institutes in Poland and abroad.

- At the turn of 2024 and 2025, relations with almost 50 research teams were opened, and the company is already in advanced talks with 22 of them, and with over 10 it is reviewing areas for cooperation based on various agreements - we read in the report.

The aim is to significantly accelerate commercialization processes and increase the number of implementations of innovative OLED materials.

In our opinion, thanks to the already advanced talks with 10 smaller electronics manufacturers and 11 world-class corporations, Noctiluca can count on dynamic growth in sales revenues in the coming years.

The pace of registration of developed solutions is also worth noting.

- Noctiluca managed to register the first patent families and achieve the first sales already in the fifth year of its operation, while its industry competitors took at least 8-9 years to do so - the report stated.

A technology for which there are no alternatives, but the competition is not sleeping

Erste analysts have identified the most significant risk factors for the company's continued operations, simultaneously assessing the likelihood of their occurrence. They assess the possibility of technological change as relatively low.

"OLED technology, although currently considered the leading solution for modern displays, is not free from the risk associated with the emergence of new, competing solutions. OLED is rapidly increasing its market share, and global industry leaders are constantly investing in innovations that can provide a market advantage in subsequent generations of devices. Therefore , it cannot be ruled out that in the medium to long term, display technologies characterized by higher brightness, durability, or energy efficiency will emerge , which could challenge OLED's position as the market standard," the report states.

At the same time, it was emphasized that in many key segments OLED currently remains a technology without real competition.

They see a similarly low probability of a negative impact in the tense relations between China and Taiwan.

"In the event of an attack on Taiwan, we can expect problems with the availability of semiconductors, and therefore with the production of electronics in general. In such a scenario, Western countries could impose sanctions on China. This could lead to a decline in display production and a slowdown in technology development by companies. In such a scenario, it would be necessary to recreate electronics production capacity, including displays, in Europe and the US, and consequently build new value chains, of which Noctiluca is a part."

It is worth emphasizing that the chemical compounds developed and produced by Noctiluca do not contain rare earth elements, over 90% of which are produced globally by China and Russia.

A few days ago, Noctiluca announced the execution of a letter of intent (LOI) with a potential capital investor from East Asia, specifying the key terms of a potential investment in the company. The LOI stipulates the investor's potential intention to acquire newly issued shares at a unit price of PLN 90 per share, for a total consideration of between USD 3 million and USD 4 million. The investment will constitute a follow-on round to the company's 149,000-share offering in June 2025.

Importantly, the letter is non-binding, and the finalization of the investment is contingent on the results of due diligence and final negotiations, as well as obtaining final approvals.