Korean Issue up >8%.
Today opened above that $9.65 resistance and stayed above that level all day with only a transitory test. Unless something weird happens overnight in Korea, we will definitely open above $10, and we should be able to consider $9.65 as a support.
I'm still long with an oversized position, but I lightened significantly Friday-Tuesday and sold some $10 and $12.50 calls against my core position. I was just locking up some trading profits and hoping to find a Fibonacci retracement to add back around $8.85 and possibly $8.35. The move tomorrow is going to reset those levels and the uptrend is fully intact. Oh well; lost opportunity. I still do have some decently sized and un-hedged long trades in place, so I can still enjoy the ride up.
The skies are blue ahead, and it is hard to figure out from the charts where this ends on the upside. I'm not likely to chase with new or added positions without a pullback. I appreciate the pricing power LGD currently has, but it is hard to solve the Capex balance with the currently healthy market. This is not a simple business model. I will add to adjust the ultimate size of my core position based upon CapEx with an eye towards creating barriers to entry within the OLED space. I really don't see Micro-LED as a huge threat for a while especially to the extent that it requires LTPS.
I am agnostic as to whether they scale up multiple lines at the current 2500x2200 substrate size or if they tackle 10.5g glass, but I would like to see them commit to a ramp. (I have a MUCH older and larger stake in OLED, so perhaps that influences my bias.)
For me, the key to the long story is the entry of so many set makers into the OLED television space. As the sole panel supplier, this will give LGD significant pricing power even as they scale up production. Moreover, LGD still has additional efficiencies to gain through MMG implementation and just scaling up the production numbers. As the current lines reach peak efficiency, new lines should be able to benefit from that learning curve. As equipment gets added, the depreciation cost per m^2 of glass should improve as well as synergies for other overhead, packing & shipping, sales and administrative costs.
I will be listening for confirmation of that long story on the conference call coming up in a week.
Chessboard,
Andy |
