Rupert Foster, chief executive of FM Capital Management tells MoneyWeek where he’d put his money now.
There are some interesting product wars taking place at the moment that most consumers are probably aware of.
In the flat-panel display (FPD) TV market there are three competing technologies: LCD TV, Rear Projection TV (RPTV) and Plasma Display Panels (PDP). Early buyers mostly went for the PDP screens a few years ago and this looked like being the dominant technology.
However, the dramatic fall in LCD panel prices over the last 18 months has allowed this technology to wrest control of the market, especially below 40-inch panel size. Above 40 inches, LCD screens are still very expensive.
The surprise success, however, has been RPTV. This is an old-fashioned technology that has been cleverly re-worked. Now it allows for screens only slightly deeper than PDP or LCD, but with often better picture quality and better pricing. RPTVs have swept the US market for 40-inch-plus screens and it now looks likely that PDP will disappear and the market end up split between the other two.
This means that it is worth shorting PDP manufacturers or component plays such as Pioneer (PIO, $18.40) and buying into LCD TV plays, such as Shibaura Mechatronics (6590, •889) and Sharp (SHCAY, $15.35).
RPTV plays are possibly the most interesting of the lot, with Phoenix Electric (6927, •2,095), the largest maker of RPTV lamps, the best-geared company to the growth in this technology.
We are also seeing the first signs of the death of the compact camera. Within five years, they’ll be replaced by mobile phones. Already in Asia you can buy a mobile phone with a three mega pixel zoom camera and enough flash memory to store 60 photos.
This dramatic shift will benefit camera-component companies that are able to miniaturise their components. But it will hit all the brand camera manufacturers, especially Olympus (OCPNY, $20.15) and Casio (CSIOY, $151).
But the mobile phone isn’t going to stop there: its next target is the iPod, or portable MP3 player. In Asia, phones with hard-disk drives, which will store thousands of songs downloaded via a 3G mobile network, are appearing and all sorts of firms are starting to benefit. Record companies are seeing their revenues recover due to song download hits. Avex (7860, •1,438), a leading music company in Japan, has seen its revenues rise dramatically. Hard-disk-drive plays, such as Nidec (7756, •1,542) and Hoya (7741, •10,710), have benefited from booming iPod sales, but as we move into the mobile-phone market, their volumes are going to explode.
Elsewhere, the changes in the global gaming industry throw up opportunities. Macau has been chosen by the Chinese authorities as their off-shore gambling paradise and this will allow Macau to outpace Las Vegas within the next decade. Interesting plays include Wynn Resorts (WYNN, $61.43) and its Japanese business partner, Aruze (6425, •2,700).
That said, Japan itself may allow casinos soon, giving Aruze another opportunity, although Tokyotokeiba (9672, •174), a racetrack operator part owned by the Tokyo metropolitan government, may have better potential in the Japanese casino market.
Closer to home there is the newly listed Gaming VC (GVC, 495p), a German online casino. The company, which is advancing into new markets in Italy and Spain, has committed to paying out all earnings in dividends and the shares are on under ten times this year’s earnings.