Sollensys Corp. (SOLS)

[Big_Money_Upward]

Reasons To Buy Sollensys (SOLS.OB)

The rapid rise of smartphones and tablets largely caught tech giants by surprise. Once top of their game, companies like Microsoft, HP, Dell, and Intel , among others, have since fallen well behind the curve. In playing catch up, it should not be surprising that they are focusing largely on touch-sensitive technologies. Most notably, Microsoft released a Windows 8 monitor that was capable of gesture recognition. 80% of mobile devices--and there are roughly 6.4 billion cellular subscriptions across the world--are believed to be touch-sensitive.

Ultimately, touch helps engage the user with his/her device in a way that wasn't possible for the traditional PC. And it has paid dividends to those who have applied the technology--DisplaySearch is forecasting that Apple iPad shipments may hit 100 million in 2013 and half will come from the iPad mini. Overall, 170 million tablets are expected to be shipped in 2013, so Apple still retains a dominant lead in the market. In my view, it largely owes its current success to the early-mover advantage it established in successfully applying 5-finger gesture recognition to electronics.

A Sustainable Competitive Advantage

Right now, Apple currently two main glass manufacturers, AUO and LG Display. A new South Korean company that was recently went public through reversing into a public shell, Sollensys (OTC:SOLS) is positioned for attractive returns. This company is uniquely capable of strong design wins, since it is vertically integrated. That is to say, it produces all of the aspect of the touch screen sensor module--from the glass to the LCP display and touch screen panel (TSPs). Most companies focus on piecing together parts sent in from other manufacturers--a business model that has the effect of racking up costs and passing on significant inefficiency to corporate buyers.

It should thus be of no surprise that Sollensys is able to produce touch sensor modules as much as 3x faster than its competitors can. Furthermore, the company has less than a 5% defect rate, which compares very favorably against 30% - 40% for the wider marker. This strength has enabled Sollensys to gain financing from South Korea's largest bank, KB Bank. And while the company is risky in light of its penny stock status, Sollensys has gone on to winning multiple awards that confirm its potential. These awards range from government grants and community support to a T2 tech grade, which is only given to the top 5% of South Korean producers. The plan is now to roll out 10 new factories across the plan in an aggressive licensing initiative that will target high-growth emerging markets and broad distribution.

Targeting Soaring Demand

Investors should also be aware that Sollensys is a maker of capacitive touch panels. What does capacitive sensing mean? A capacitive touch screen registers human gestures through detecting manipulation of an electrostatic field. By contrast, a resistive touch screen registers a variety of non-human touches. Ever tried touching a mobile device or a MacBook mousepad with a blanket or paper? If your gestures didn't register, the device was is capacitive.

Capacitive devices are attractive since they prevent unintended objects from making that awkward call to your ex-girlfriend. This favorable feature is expected to have sent capacitive touchscreen sales rising 174.1% in 2012 through market share gains. According to data from Displaybank, around 70% of Samsung's handset shipment volume came from capacitive screens, as opposed to resistant screens. This is expected to rise to around 90% by as soon as this year. Thus, this transition will meaningfully benefit Sollensys going forward.

You can have a great industry and a product; but, if the market is too saturated, economic profits will be relatively thin. This can be seen in how semiconductor and steel manufacturers continue to set up new mills even despite inventory surpluses. Fortunately, Sollensys is in quite a different market environment. According to an equity research note by KGI Securities, "the LCD panel sector will face tight supply in 2013" with "demand… expected to grow 10% and supply just 4%". This will support high-margins and a strong amour of cash flow that can then enable Sollensys to reinvest into new products for long-term growth.

A Sollensys "Buy" Makes Sense

While penny stocks can be risky due to their thin trading and limited operating history, Sollensys has already secured support from the leading South Korean financiers and has a sustainable competitive advantage. This advantage comes from its full package touchscreen offering and its focus on capacitive sensing. I recommend buying shares in this emerging company as it continues to build out new factories and win over new customers.

DISCLOSURE: The distributor of this research report is not a licensed investment adviser or broker dealer. Investors are cautioned to perform their own due diligence as information contained within this report has been derived by public sources and cannot be guaranteed by us to be fully accurate. This article is for general interest and prospective clients, repeat or new, who may now or in the future have a position in the company.

Always discuss investments with a licensed professional before making any financial decision. Statements made herein are often "forward-looking statements" as stipulated under Section 27A of the Securities Act of 1933, Section 21E of the Securities Act of 1934, and the Private Securities Litigation Reform Act of 1995. Since these statements are uncertain, actual results may be materially different from those expected.

source:
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