Accelerated progress; Chinese Telco OEM on track

The accelerated development programme with Noctiluca’s lead Chinese OEM continues apace. With qualification largely complete, this engagement is now transitioning to industrial testing expected in mid-2026. While risks remain, the programme is firmly on track towards commercial volumes, with potential to generate c $5m in annual revenue. Other key programmes continue to progress, including the TCL JDP advancing towards a multi-layer (EIL+ETL) industrialisation pathway, while the broader MTA pipeline remains active with c 20 engagements. This progression is supported by validation of NCEIL-4’s ability to extend blue pixel lifetime by >100% across multiple device structures.

Results slightly ahead, more grant income secured

FY25 revenues were PLN3.64m (vs Edison PLN3.24m) with year-end cash of PLN4.9m (Edison PLN5.9m). Our revenue forecasts are unchanged, but we now factor in c $3.5m (c PLN12–16m) of investment in test equipment across FY26–27, which management believes could accelerate development cycles by up to 50%. This is partially supported by a growing base of grant funding, with the balance likely to be raised through equity once further positive milestones are achieved. The company remains on track to deliver a significant commercial inflection from 2028.

Central PLN183/share valuation unchanged

We leave our central valuation of PLN183 per share essentially unchanged, reflecting the balance between potential near-term dilution from future funding and the reduction in execution risk as key programmes progress towards commercialisation.

Recap on a transformational 2025

Over FY25, Noctiluca made exceptionally strong progress in both expanding and advancing its partner base, laying the foundations for a potential inflection in operationally leveraged growth from 2028.

The company increased its portfolio to c 15 active testing partners globally, with a clear concentration in China and Taiwan, and added a second joint development project (JDP), OLED on Silicon (SiOLED), alongside its existing TCL programme. It is now collaborating with eight of the top 10 global display manufacturers. Most notably, in Q3 the company announced that the world’s largest telecoms equipment manufacturer progressed from a material transfer agreement (MTA), signed in May 2025, to pre-production testing, with production-line testing targeted for Q226 and the potential to bypass the traditional JDP phase entirely. In Q4, Noctiluca further strengthened its position in China by signing a JDP with a Chinese SiOLED microdisplay manufacturer, marking its second JDP in the region and seventh agreement in China during FY25.

Alongside this accelerated progress with the leading telecoms OEM, the TCL JDP (initiated at end-2024) advanced in line with the plan, reaching c 65–70% completion across both electron injection layer (EIL) and electron transport layer (ETL) qualification milestones. More broadly, several MTAs progressed into more advanced MTA+ structures, reflecting a shift towards deeper, commercially oriented engagements.

Management has reiterated its strategic objective to convert a number of existing MTA and MTA+ engagements into JDPs over the next 12 months, further expanding the company’s opportunity set while diversifying customer risk.

Exhibit 1: Most important breakthrough projects as of December 2025

Source: Noctiluca

Three partners on a pathway to mass production readiness

We see 2026 as a potentially pivotal year for Noctiluca, with the prospect of its technology achieving formal qualification for mass production. Importantly, the company entered the year with three parallel and largely independent partnerships that are currently on track to achieve this goal. Two of these (the world’s largest telco and TCL Group) are considered to be ‘tier one’ opportunities, capable of delivering $5m+ in annual revenues once volume shipments ramp.

World’s largest telco OEM: Accelerated progress to industrial validation, pathway to commercial scale

The partnership with the world’s largest teleco OEM was initiated in 2023 and has rapidly progressed through MTA to MTA+ stage, focused on deploying Noctiluca EIL (NCEIL) materials within smartphone OLED stacks, where early testing demonstrated >100% lifetime improvements.

The accelerated progression of Noctiluca’s partnership with this customer to production-line testing puts it in pole position to move towards commercial shipments. At the time of our January initiation, this engagement had already reached MTA+ stage, supported by trial sales and strong early validation (>100% lifetime improvement), making it the most advanced programme in the pipeline. We believe that smartphones are the most likely application being targeted.

Progress with this customer looks fully consistent with the roadmap outlined in our January note. The programme continues to track towards production-line testing in Q226, with management now confirming that c 85% of industrial qualification requirements have been met and that final redundancy testing is scheduled for mid-May, ahead of transition to production testing shortly thereafter. Importantly, the partner has now explicitly confirmed the decision to bypass the traditional JDP phase, reinforcing both the accelerated nature of the engagement and increasing confidence in execution.

Financially, the relationship is already contributing through trial sales, while also driving higher development activity as the company prepares for scale up. While technical and commercial risks remain and qualification is not yet assured, we see the company’s delivery on this accelerated programme as the most promising development influencing the investment case.

TCL Group: Progress on track – focusing on an integrated layer approach

The partnership with TCL (the company’s ‘Chinese partner’) was formalised through a JDP at the end of 2024, following earlier MTA-stage collaboration, and it is focused on qualifying NCEIL materials for next-generation IT OLED applications, including monitors and laptops.

Progress with TCL remains on track and highlights an important evolution in the scope of Noctiluca’s technology deployment. The JDP is progressing in line with its planned development cycle, with products expected to reach commercial readiness towards the end of 2027.

Development has advanced across two key streams. NCEIL as a standalone material in the EIL is c 65–70% complete, with test results demonstrating significant improvements in blue pixel durability in optimised architectures (eg Ag:Mg cathodes), although performance remains dependent on full stack compatibility. In parallel, NCEIL as a dopant in the ETL is c 65% complete, with management indicating that combined EIL+ETL deployment could extend blue pixel lifetime by up to 15x (c 1,400%).

More recently, the programme has evolved from a single-layer focus to a more integrated approach, with Noctiluca working to replace both the EIL and ETL layers simultaneously. This reflects the substantial performance benefits of a combined solution and the partner’s device architecture constraints, where compatibility across adjacent layers is critical, making a full-stack implementation more effective than partial substitution.

Exhibit 2: OLED materials stack

Source: Noctiluca, Edison Investment Research

While this shift to an integrated approach may risk extending timelines relative to single-layer implementations, we also believe that it materially expands the potential value of the engagement. The ETL is c 30–40 times thicker than the EIL, while the more significant potential efficiency gains transform the return on investment from using a Noctiluca combined solution. This positions Noctiluca to capture a larger share of the materials stack if successfully commercialised.

Taiwanese PMOLED OEM: Near-term commercial opportunity

The partnership with a leading Taiwanese passive matrix OLED (PMOLED) OEM originated from an earlier MTA-stage collaboration and focuses on deploying NCEIL materials in monochromatic OLED displays for home appliances and wearable devices.

Progress with this partner highlights a further pathway towards near-term commercialisation, with the company now engaged in advanced commercial discussions. Test results to date have been encouraging, with trials demonstrating >100% improvements in device lifetime across configurations, supporting the case for adoption in lower-complexity, high-volume applications. The engagement has progressed towards potential validation, with verification targeted for H226, subject to confirmation following an upcoming on-site meeting at the customer’s headquarters.

While smaller in scale than the company’s flagship tier-one programmes, this engagement offers a potentially faster route to commercial revenue given the simpler device architecture and shorter qualification cycles typical of PMOLED applications. As such, successful validation could provide an important early proof point of commercial traction and support incremental revenue growth ahead of larger-scale deployments.

Capex investment to support parallel development and pathway to volume production

Noctiluca is planning a step-up in capital investment over 2026–27 to build out its internal engineering and process development capabilities. This investment is centred on the purchase and installation of proprietary physical vapour deposition (PVD) equipment. Investment in this equipment is primarily aimed at enabling the company to support a broadening base of development partners and, critically, the transition of leading customers from research into development and now industrialisation. Management estimates that post deployment, this facility will enable a 50% shortening of development cycles.

• As programmes advance, timelines compress and the need for rapid iteration and tight integration with customer production processes becomes essential – something that cannot be effectively delivered through third-party labs.
• In-house PVD capability removes a key bottleneck in material screening, enabling real-time feedback across c 15 parallel partner programmes and reducing iteration cycles from months to weeks.
• It also provides the level of process control required to optimise materials under production-relevant conditions, particularly for more complex solutions such as integrated EIL+ETL stacks.

The planned investment, spread over 2026 and 2027, will drive a step-up in tangible assets and associated depreciation, but is expected to materially enhance development throughput and support the pathway to volume production. Funding is expected to come from a combination of grant support and a milestone-dependent equity raise, most likely related to progress with the ‘world’s largest Telco OEM’.

Exhibit 3: Estimated efficiency gains from PVD equipment investment

Source: Noctiluca

Grant offensive delivering results

Noctiluca has made notable progress under its ‘grant offensive’, securing five new grant-funded projects in FY25 with a total value of more than PLN10m, including c PLN6.8m of non-dilutive funding. This builds on an existing base of grant support and provides funding visibility over the 2026–28 period. Applications for a further PLN16.9m have been made, with more planned beyond that, offering potential funding upside and extending the runway for R&D and commercialisation activities.

Industry update

A scan of recent developments in the display industry are largely confirmatory of Noctiluca’s strategy and align with the dynamics the business is reporting, with multiple new manufacturing lines being built, new materials and multi-layer architectures being developed to improve performance and China continuing to take market share:

• New production lines for laptops and monitors: TCL, Samsung, BOE and Visionox have announced (and started construction) of 8.6-Gen IT AMOLED lines. TCL is reported to have commenced construction in November 2025, which means that realistically mass production will likely begin only in 2028 or later (Recent OLED Industry News - March 2026 | OLED-Info).
• China is expected to overtake South Korea in OLED production by 2029: Driven by the construction of multiple new manufacturing lines, China is expected to overtake South Korea in OLED production by 2029, according to CounterPoint research (China Set to Overtake South Korea in OLED Production by 2029 - English News1).
• Clear industry focus on improving blue pixel efficiency highlights Noctiluca’s opportunity: Across the OLED industry, multiple approaches are being pursued to improve blue pixel efficiency and lifetime, including hybrid emitter systems (eg Visionox), next-generation phosphorescent materials (UDC) and multi-layer (tandem) device architectures (Samsung). While progress is being made, most solutions remain incremental or face trade-offs between efficiency and durability. Against this backdrop, materials such as NCEIL-4, which demonstrate transformational performance improvements, highlight the significant revenue potential of step-change innovation. Importantly, the ability to deploy these materials within stacked or multi-layer structures is fully aligned with broader industry trends, reinforcing their relevance as OLED architectures become increasingly complex and performance-driven.

Financials

FY25 results were modestly ahead of expectations and reflect a business transitioning from R&D into early commercialisation. Gross revenue grew 48% y-o-y to PLN3.64m, 12% ahead of our estimate, driven by strong growth in product and service revenues (+66% y-o-y), while quarterly momentum accelerated into Q4. EBITDA improved by c PLN1m y-o-y to a PLN3.6m loss (excluding other income), (Edison PLN3.9m loss) despite increased investment to support commercialisation. Year-end net cash at PLN4.9m was lower than our PLN5.9m forecast.

Estimate changes

Our estimate changes are shown below. It should be noted that at this stage, our estimate changes primarily reflect the increased capex associated with the build out of PVD test capability, partially offset by higher grant income, together with the associated uplift in depreciation and amortisation. However, we are not yet factoring in any commercial upside from this investment, including the potential to accelerate development cycles and take on more paid research work. In this respect, our estimate changes reflect the investment but not the benefits that this investment is expected to release.

Despite the grant income, the company is likely to require additional funding to support the PVD investment programme. We believe that this is most likely to be through an equity raise, with the timing dictated by the delivery of key development or commercial milestones, which significantly de-risk the company’s pathway towards volume production, such as the commencement of production line testing or formal qualification for mass production by the world’s largest telco OEM. We are not, at this stage, forecasting additional capex to support the move to volume production.

Exhibit 4: Estimate changes

Source: Noctiluca, Edison Investment Research

We continue to view Noctiluca’s financial trajectory in two phases. In the near term the focus is on achieving operational sustainability through expanding development partnerships and growing niche product revenues. Beyond this, the transition of tier-one engagements to volume production should drive a step-change in growth and margin expansion.

The timing of an inflection remains dependent on successful qualification and customer ramp up, which may be determined by the timing at which new manufacturing facilities are brought online. However, the pace of progress, particularly with leading programmes, suggests that the company remains on track for a volume based inflection in FY28, while the acceleration in development enabled by the company’s PVD investment will enable the company to support more customers across a wider range of architectures, expanding the company’s longer-term opportunity.

In the exhibit below we show our estimate of revenue and EBITDA margins across varying uptake and investment scenarios by FY30, a timescale in which multiple partners could progress to volume production. We assume that revenues from smaller engagements grow to PLN12.4m (€2.5m) by 2030, although the company’s progress with the Taiwanese PMOLED OEM could support a higher figure.

With focused R&D and an indirect sales model, strong revenue growth can be achieved without any significant investment in opex. Consequently, rapid penetration of high-volume markets could push EBITDA margins to very high levels: 50%+ or higher. However, in the longer term, reinvestment in IP/product development, sales and account management and infrastructure will be key to achieving sustainability. Consequently, our discounted cash flow (DCF) valuation trends margins towards a more sustainable target of 25–30% EBITDA margins.

Exhibit 5: Scenario analysis: revenue and EBITDA margins

Source: Edison Investment Research

Valuation

Our mid-case scenario returns an unchanged fair value of PLN183 per share. We believe the current share price could be justified by progressing just one or two tier-one partners to modest commercial volumes. Significant uptake by one or more tier-one opportunities should support a valuation of around PLN400 per share.

We do not, at this stage, factor any potential dilution from a future fundraise into our valuation. However, we believe investors should assume a raise at least sufficient to cover our forecast trough debt of PLN8.4m at year end, equivalent to c 6.8% of the current market capitalisation. In practice, we expect the timing of any raise to be aligned with the achievement of a significant positive milestone, which would support a stronger valuation outcome. As the company progresses from a development-stage business to a commercial supplier of high-performance materials, we believe it will be appropriate to apply a progressively lower cost of capital within our DCF framework.

In an industry characterised by pre-commercial, IP-led acquisitions, a strategic trade sale remains a credible outcome and a potential source of significant upside. Precedent transactions – such as Samsung’s €260m acquisition of Novaled at c 10x sales and the $300m purchase of Cynora’s IP despite zero revenue – underscore the premium valuations that can be achieved by IP-rich OLED materials innovators.

DCF sensitivity analysis, bt scenario and WACC

Source: Edison Investment Research

Exhibit 6: DCF sensitivity analysis, by scenario and WACC

Source: Edison Investment Research

Exhibit 7: Financial summary

Source: Noctiluca, Edison Investment Research estimates