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Did Polypore’s Battery Just Die?

Filtration-technology maker Polypore International (NYSE: PPO ) saw a free fall in its shares after announcing fourth-quarter results. While some may think this was a fallout over “disappointing” numbers, I think their results were just fine. The market seems to have been unsettled by the threat of competition from a current buyer.

So how big is the threat for Polypore?

LG Chem, no longer a chum
One of Polypore’s buyers — LG Chem — now plans to invest as much as $480 million in setting up its in-house production facility for lithium battery separators. LG Chem, a South Korean industrial giant, supplies lithium ion batteries for General Motors’ (NYSE: GM ) Volt electric car. Obviously its entry into the separator market will eat into Polypore’s market share.

However, the extent of this threat is still not clear, as LG Chem’s plans are still in formaion, which also makes it uncertain whether this company’s products will directly compete with those of Polypore’s. But the market has already regarded this as bad news, since sooner or later it seems like it could weigh on Polypore’s profitability. Regardless, let’s take a look at the fundamentals of Polypore.


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