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LPL price movement -3

13:25 23-Jun-15


There is a bit of a double-whammy going on today with LPL pricing.  First, the U.S. Dollar has jumped back up, particularly against the Euro.  That leads to arbitrage between the LPL ADRs and the associated Korean shares.  As discussed in my initial note on LPL, movement of this sort represents an excellent opportunity for long-term holders, IMO.

Second, IHS has published a report raising concerns about LCD manufacturing shifting to China.  I might be more concerned about this if LPL were not so cheap and about to offer a dividend.  Although there is risk, I'm not especially concerned about this, as costs are dropping along with prices.  As IHS notes, LG Display has a large captive customer in the form of LG Electronics and, as the largest of the display manufacturers, scale to compete better than others.  Furthermore, my long-term thesis is about capitalizing on the LG's technology lead for AMOLED TVs, and transitioning its capacity there. 

The latest from Korea is that LG will partner with Google to further promote these models.  My own checks indicate that demand is still for UHD AMOLEDs, where LG is just recently managing to improve yields and thus drop prices.