LG Display - screen test It should stand to reason that if people are buying more touchscreen devices, the producers of the displays making the products possible might be a good bet. LG Display has outperformed all other large-cap tech stocks in Seoul this year, even Samsung Electronics, everyone's favourite Asian tech giant. But betting on a further rally means believing the industry has evolved beyond a record of killing profit engines quicker than consumers switch smartphones. A change to industry dynamics seems unlikely. Pricing upturns like the one driving profitability this year are usually due to shortages. This time it is phone screens. But gaps do not last long: LGD's plans to convert part of an existing fab factory to small panels could double its capacity for these by the end of next year. Well before then, Samsung and Sharp will have lifted their production too. Almost as brief as the shortages are the lives of fabs. Cutting-edge technology involves heavy cash bleeds with only a short window to make good on the cost before the next big thing comes along. Fabs producing so-called TFT LCD screens - now on the standard side of cutting edge - have been steadily cash profitable for the last four years, according to Bernstein. But add in depreciation and the result is two straight years of accounting losses. LGD is considering stretching depreciation over five years from four. The sensitivity is such that doing so would lift next year's reported operating profits by a third, Nomura estimates. LGD's shares are up by two-fifths this year, better than Samsung's 30 per cent, and ahead of its Taiwanese rivals and Sharp. That equates to 1.3 times book value, at the higher end of its usual range. So far LGD has made the right tech bets, but in an industry where advantages fade fast, that deserves a premium as brief as consumers" smartphone preferences.