Hi Jurgis -
What's your price expectation for GLW? I have a pretty large position that I acquired in 2002. I peeled off a few shares recently to cover my original cost but continue to hold the rest.
The company has four major operating divisions: Display Technologies, Telecommunications, Environmental Technologies, and Life Sciences. Most people are only aware of their big two: (1) Telecommunications (fibre optics) and (2) Display (LCDs).
GLW has several hidden jewels in their "Other" operating divisions and one through an outside (JV) investment w/ Dow Corning.
GLW owns a 32% interest in Hemlock Semiconductor Corp. a JV w/ Dow Corning, Mitsubishi and Shin-Etsu Chemical Corp.. (http://www.hscpoly.com/About%20Hsc/Ownership/hsc_ownership.htm).. HSC is the world's largest maker of polycrystalline silicon, an ultra-pure rock-like material used in solar panels and semiconductor chips. The demand for silicon is growing at about 35 to 45 percent annually. HSC makes 14,500 metric tons of silicon annually now. This is a picture of their new $1.3 Billion expansion plant that will increase their production to 36,000 metric tons/year. (http://www.mlive.com/businessreview/tricities/index.ssf/2008/05/hemlock_semiconductor_project.html ). Today HSC announced the finalist for their next expansion plant. This was a surprise to me since they just completed the one shown above. UPDATE: Hemlock Semiconductor confirms Clarksville, Tenn., a finalist for next expansion (http://www.mlive.com/saginawnews/business/index.ssf/2008/07/update_hemlock_semiconductor_c.html ).
Another hidden jewel is a product manufactured in their Environmental Technology division. It is their new diesel catalyst filter. Sales have doubled from 2006 to 2007 ($260 million) which represents 5% of GLW's total 2007 annual revenues. Their new diesel filters were released in Europe in the beginning 2007 and will be available in the U.S. starting in September 2008. Their new diesel catalyst filter meets or exceeds all of the new 2008 U.S. EPA requirements. Revenues from this product could double again in 2008 as manufactures are required to use this product in all new US diesel vehicles.
The little filter that could
mpnnow.com
From the article:"...Between the Jetta’s diesel-engine exhaust and the outside world sits the DuraTrapAT diesel filter, Corning’s aluminum titanate ceramic catalyst created for diesel VWs. Hundreds of thousands of VW’s with the Corning DuraTrapAT are already on the road in Europe and elsewhere. They arrive on the U.S. market in September.
Corning Inc.’s filter removes 99% of a diesel’s excess carbon soot from the exhaust, making Jetta emissions cleaner than some gasoline vehicles.
Corning’s ceramic diesel exhaust filters may not seem very high-tech, but it generates great black ink on company balance sheets. Net diesel product sales, including heavy truck diesel filters, rose to $249 million in 2007 from $164 million in 2006...."
The last hidden jewel GLW has are their many patents. These include several in the Fibre Optic area and recently new patents received from research done at their Life Sciences Division. (http://www.dddmag.com/news-Patent-Corning-Epic-System.aspx). If their new Epic-System (developed in their Life Science Division) is adopted as a standard "industry practice" by the main drug companies, this product could generate a significant stream of new revenues.
My long term minimum price target for GLW is $34.00/share. I have owned this stock for six years and continue to hold. There are many new products in the pipeline that should contribute to their core sales generated from their Display Technologies & Telecommunications Divisions. There should be at least another 36 months of double digit sales growth which should support a high teen PE.
The forward PE of 10 is too low IMO. Based on a 17 PE and $2.00/share 2009 EPS estimate, GLW would be fairly valued at $34/share.
EKS |
