AUO: Optronics 3rd largest maker of flat panels p/e: 3.9 p/s: .62 p/b:.99 ROE: 26.5% ROIC: 18.5% Shares tumbled despite yoy earnings growth tripling. Fears of oversupply could compress margins in the 3rd quarter, but the market has most likely factored that in. In the not so long run, a rising Asian and Latin middle class will consume more and more LCD products...any glut of LCDs will not last long. I've gotten burned on commodity goods like this before, but I think it's worth a look. Obviously, there's no financial exposure here, yet the share price has been dragged down with the EEM correction/financials turmoil. I would argue that LCD production remains a secular growth industry. The need for OECD consumers to replace existing products, combined with rapidly growing emerging market demand means growth should continue.
Thanks for sharing. I covered AUO on Seeking Alpha. Here was my thesis... In the past two quarters revenues have fallen ~10% and guidance finishing off the year is also somewhat negative (in terms of revenues). However profit is up a tremendous amount and the company is in a very strong financial position to weather the industry downturn. The current market cap is $2.86bn while the OCF is $2.04bn. EV/EBITDA also sits at a very low 1.56x. There is low to no downside and tremendous upside. http://seekingalpha.com/article/360...eated-undervalued-company-long-term-potential