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Flat-panel maker's brighter picture

"Strong demand for the flat-panels used for PCs and explosive demand for flat-screen TVs next year are major factors in pushing our profitability higher in 2004."

Liu Chih-chun, spokesman for Chunghwa Picture Tubes

Chunghwa Picture Tubes Ltd (中華映管), the nation's No. 3 flat-panel display maker, said yesterday it will finish in the black this year based on ongoing booming demand and surging selling prices for panels.

Raising its financial forecast for this year for the second time, the company is predicting a NT$0.17 earnings per share for this year, up from the loss of NT$0.16 it estimated previously, according to James Wu (巫俊毅), the company's assistant vice president for the finance division.

With that momentum expected to extend into next year -- along with fast growing demand for flat-screen televisions -- Chunghwa Picture revised upward its consolidated sales forecast for next year from the NT$89.73 billion it predicted back in September to NT$121.4 billion.

The company expects after-tax profits to jump to NT$8.23 billion next year, or NT$1.25 earnings per share.

The company's upward revision is due in large part to the strong growth in its TFT-LCD section.

"Strong demand for the flat-panels used for PCs and explosive demand for flat-screen TVs next year are major factors in pushing our profitability higher in 2004," company spokesman Liu Chih-chun (劉治軍) said.

The company also adjusted its estimated loss for its plasma-display panel (PDP) unit to NT$500 million for the year, down from the NT$646 million it predicted previously.

But Liu dismissed market speculation that the company is about to spin off its PDP unit.

Industry watchers said spinning off the PDP and cathode-ray tube (CRT) units would be the right thing for the company to do.

Chunghwa Picture's CRT venture in China, CPTF Optronics Co (華映福州光電), is scheduled to offer initial public offering on the Shanghai stock exchange in the third quarter of next year.

"We're glade to see Chunghwa Picture separating its PDP and CRT units from its money-making TFT-LCD side," said Eric Twu (涂紀華), an analyst at SinoPac Securities Corp (建華證券).

"A growth in the company's TFT-LCD unit may mean a negative impact on either its PDP or CRT unit," he said.

In addition, it will be easier for a spun-off PDP unit to collaborate with other companies to invest in the promising PDP television market, Twu said.

Chunghwa Picture is seeking potential strategic partners in developing PDP televisions, Wu told the Taipei Times.

"Sampo Corp (聲寶) is one of our potential partners. Those with manufacturing capabilities who need our flat panels will be our top priorities," he said.

But Sampo said it is still in talks.

"We're interested in the tie-up, but no substantial conclusion has been reached," said Kanty Wu (吳錦芳), Sampo's deputy spokesman.

Sampo, the nation's largest home-appliance maker, now gets its PDP supplies from South Korea's LG Electronics, Samsung Electronics and Formosa Plasma Display Corp (台塑光電).

"It would be a win-win deal for the two companies to make inroads into the fastest-growing Chinese flat-screen TV market, especially with PDP TVs, which are much cheaper than TFT-LCD TVs," said Helen Chen (陳佩君), a consumer-electronics analyst at Polaris Securities Group (寶來證券) in Taipei.

But Twu said the deal with Chunghwa Picture may not be good for Sampo.

"Sampo should carefully calculate the investment ratio as high capital expenditure will drag down the profitability of PDP original equipment manufacturers like Sampo," he warned.
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