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AU Optronics surges on big Q1 profit predictions

Shares of AU Optronics Corp (友達光電), the nation's largest maker of flat-panel displays for computers and televisions, surged following a Chinese-language newspaper report that it may make a first-quarter profit of NT$10 billion (US$302 million).

The shares rose NT$3.40, or the 7 percent market limit, to NT$52.50 yesterday, the highest since the market close of NT$52.86 on April 17, 2002.

Shares of Chi Mei Optoelectronics Corp (奇美電子), AU Optronics's closest domestic competitor, rose NT$1.50, or 3.3 percent, to NT$46.70.

AU Optronics declined to comment on the report.

The company may report first-quarter net income of NT$7.7 billion, based on the mean estimate of three analysts surveyed by Thomson Financial. The highest estimate in the Thomson Financial poll was for a profit of NT$8.5 billion.

"The business cycle for this company hasn't yet peaked," said Eric Lin, an analyst with UBS Securities Ltd, who's forecast a NT$7.6 billion first quarter profit for AU Optronics.

The company's gross margin, or the percentage of sales after production costs, will rise to 28.4 percent in the first quarter from 28 percent in the fourth quarter, he said in a report published on Monday.

Yesterday was the second straight day the shares rose by more than 6.5 percent.

AU Optronics's earnings for this year will increase 57 percent from a year earlier on rising prices and higher output, a BNP Paribas Peregrine analyst, Frank Su (蘇穀祥), said in a report on Wednesday.

It will post a NT$8 billion first-quarter profit, Su said.

Still, some investors and analysts said panel prices will fall. They are expected to decline in next month, ABN Amro Asset Management investor Pedro Tai said on Tuesday.

Tai counts shares in Taiwanese flat-panel makers among the more than US$200 million he manages in Taipei. The fall may be a "short-term dip," he said.

Prices of computer panels will drop by 15 percent this year compared with a drop of as much as 35 percent for TV panels, Lin said.

AU Optronics said it doesn't plan to increase the portion of its TV-panel output significantly until next year.

Max Cheng (鄭煒順), the company's chief financial officer, declined to comment on its profit outlook, according to spokeswoman Hsiao Ya-wen (蕭雅文).

The company expects to give a full-year profit forecast by the end of April, she said. The annual shareholders' meeting will be on April 29.

AU Optronics, which is cutting costs at its newest factory faster than originally expected, will probably improve profit from the NT$178.9 million in the three-month period ended March 31 last year, the report said.
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