Chi Mei Optoelectronics Corp (奇美電子), Taiwan's No. 2 maker of liquid-crystal-display (LCD) screens, yesterday said its bottom line will improve further in the current quarter on brisk sustainable demand, which would ease concern over a glut early next year.
Chi Mei made the positive comments after returning to profitability last quarter, ending four straight quarterly losses while prices slumped on a supply glut.
"We are cautiously optimistic about the first quarter of 2006," Chi Mei president Ho Jau-yang (
"According to our own assessments, the oversupply will not be as serious as some market researchers have predicted," Ho said, sharing the optimistic remarks of Chi Mei's bigger local competitor AU Optronics Corp (友達光電) last week.
LCD-TV demand is better than expected and sales of laptop computers would remain strong during the first thee months of next year, bucking the industry's downtrend on seasonality, he explained.
Market researcher DisplaySearch yesterday warned that LCD-panel supply would exceed demand by 10 percent in the first quarter of next year at the earliest, citing overly aggressive output expansion.
"Although we are very optimistic about LCD-TV demand, we still foresee the formation of a surplus of less than 20 percent," Ross Young, a president of the Texas-based researcher, said at a conference on high-definition TV in Taipei.
Despite warnings of a looming glut, Ho said that shipments will increase by up to 20 percent this quarter from 6.5 million units last quarter amid robust demand for computers and TVs, and stabilizing prices. The growth rate would accelerate to 50 percent year-on-year next year, after two new advanced plants ramp up production, he said.
Growth for LCD TV panels would be faster at an annual pace of 80-percent to 10 million units next year, from 5.5 million units this year, Ho said.
Chi Mei posted its first profit over the last four quarters with net income of NT$3.38 billion (US$100.7 billion), or NT$0.7 per share, beating an estimate of NT$3 billion for the third quarter. Ho attributed the better performance to rising shipments and recovering prices.
Gross margin improved significantly to 14.6 percent from 3.7 percent in the second quarter, during which the company lost NT$1.7 million, or NT$0.37 a share.
"Chi Mei is worthy to receive an award for making the biggest progress," said Frank Wang (王安亞), an analyst with Morgan Stanley.
Quarterly earnings were flat compared to NT$3.37 billion in the same period last year, according to a company statement. Sales jum-ped 74 percent to NT$41.31 billion year-on-year, it said.
"Chi Mei's performance impressed me. I think the company will weather the next industrial downcycle better because of an improved product portfolio," said Helen Huang (黃玉惠), an executive director of Goldman Sachs' Asia-Pacific Investment Research.
Chi Mei has been focusing on making TV panels, which helped
the company grab 20 percent of the global market, but the company said it is increasing the production of computer panels to diversify its products.
Chi Mei shares rose 0.44 percent to NT$34.6 on the Taiwan
Stock Exchange yesterday.
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