Syntax-Brillian: Worldwide LCD Markets Continue Torrid Growth

InformationWeek reports:

ISuppli on Tuesday raised its revenue forecast for the year for large-sized LCD panels, citing rising demand, tightening supplies and increasing prices.

The market researcher said global revenues would reach $66 billion, up 22.2% from 2006. The new number was 6% higher than the previous forecast of $62 billion. ISuppli defines large-sized LCD, or liquid-crystal display, panels as at least 10 inches diagonally.

ISuppli also upped its 2007 global forecast for shipments, which are expected to reach 353.8 million units, 25.2% more than last year. Earlier this year, the firm had predicted 350.1 million units for this 2007.

The LCD sector is not only growing faster than originally projected, but LCD prices themselves have been slowly increasing

Syntax Brillian's (BRLC) Olevia brand's top quality is in part their choice of the finest panels available, and their main panel supplier LG Philips recently reported a very good second quarter:

LG.Philips LCD Co. Ltd. has announced its financial results for the second quarter (2Q) of 2007. Sales grew 23% quarter-on-quarter to 3.355 trillion Korean won (2.722 trillion won in first quarter (1Q) of 2007) and 45% year-on-year (2.315 trillion won in 2Q of 2006).

Syntax-Brillian's partner Kolin is also reporting record sales:

Kolin saw LCD TV shipments jump nearly 30% on year in the first quarter and the maker shipped 360,000 LCD TVs for the first five months of this year, according to a recent report from Chinese-language Apple Daily.

The company expects its LCD TV shipments to exceed 460,000 units for the first half of 2007 and reported revenues for the first five months jumped 35.98% on year to NT$7.774 billion, said the paper.

I have also noted that Kolin's stock has moved up almost 70% in value in the last 45 days. This could be attributed to Kolin not being in the extended quiet period that BRLC has been in, and perhaps it could be attributed to the Motley Fool's and others inability to publish misleading articles in Mandarin. Perhaps unwise to beat a dead horse, but at least the editor made somewhat of an attempt to correct the original article that somehow omitted 143 million dollars

Most recently, we also learned that consumer discretionary spending was somewhat better than expected right here in the continental United States on items such as LCDs, and this retail spending was credited for Thursday's market rally.

Several reports beat Street expectations — notably that of Wal-Mart Stores Inc., the world's largest retailer, which posted a better-than-expected 2.4 percent jump in sales at stores open at least a year.

It should be noted that the Olevia TV is not "yet" sold at Wal-Mart (NYSE:WMT).

We also recently learned that the Olevia brand will have wider exposure in their existing Latin American distribution chain.

"With sales channels in Brazil, Chile, Colombia, Mexico and Venezuela, Latin America is a key and fast growing market for Olevia. Our sponsorship of ESPN Deportes underscores our commitment to that market and Spanish-speaking consumers," said Hope Frank, Chief Marketing Officer, Syntax-Brillian. "With their world-class programming and production, no other partner could be as valuable in generating awareness of Olevia to these audiences as ESPN Deportes."

We also learned that CompUSA has added two additional Olevia SKUs, up from five to seven.

The LCD sector as a whole continues it's torrid growth and is projected to continue on that pace to the year 2011. BRLC's main suppliers of panels reports a healthy quarter; BRLC's partner Kolin reports massive LCD growth, US discretionary spending healthier than anticipated, LCD prices and ASPs slowly rising, Olevia exposure increasing in Latin America. Existing retailers adding additional Olevia SKUs. Obviously we remain bullish on BRLC and believe they are able to continue to tap the massive LCD revenue, over 100 Billion worldwide per year by 2011. BRLC's current one billion a year in revenue FY07 projections, leaves enormous upside potential for this young company that has just started to penetrate 26% of US retailers, the Asian pacific rim, Latin America and the European continent in future months.

As always, I suggest any new bulls take a cautious and moderate entry in BRLC as it remains a highly volatile stock and the rough and tumble rides will continue on one of the most controversial stocks in our picks for 2007.

Disclosure: Author has a long position in BRLC

BRLC 1-yr chart