Wed, Oct 18, 2006 - Page 12 News List

Innolux Display Corp plans IPO

IN THE BLACK The LCD panel maker wants to sell 200 million common shares at NT$41 per share, which would make it the second-largest domestic IPO this year

By Lisa Wang  /  STAFF REPORTER

Innolux Display Corp (群創光電), the nation's smallest liquid-crystal-display (LCD) panel maker, yesterday said it planned to raise NT$8.2 billion through initial public offering to expand capacity and repay band loans.

The share offering would be the second-largest domestic IPO this year after Nan Ya Printed Circuit Board Corp (南亞電路板), which raised NT$20 billion in April.

Innolux, 24 percent owned by the nation's biggest electronics component maker Hon Hai Group (鴻海), is scheduled to sell 200 million new common shares at NT$41 per share next Tuesday.

The share offer will account for 8.65 percent of the total 2.31 billion in outstanding shares after the IPO. Innolux will also have trade shares on the nation's main bourse.

Innolux president Tuan Hsing-chien (段行建) said the company "made profits in the third quarter, helping the company swing into the black for the first three quarters."

Innolux, established in 2003, posted NT$169 million in losses, or NT$0.08 per share, for the first half of the year.

"The worst is over," Tuan said. "Revenues and profits will recover gradually in the third and fourth quarters."

For this full year, Innolux hoped to double its revenue to more than NT$100 billion from NT$51.4 billion last year, Tuan said.

Innolux makes LCD panels to supply its computer monitor manufacturing business, a different business model from pure panel makers including AU Optronics Corp (友達光電).

"We think this is the right business model," Tuan said. "It will help us minimize the risk in the crystal cycle faced by other panel makers," he said.

Frank Lee (李宜家), who tracks the flat panel industry for Deutsche Securities in Taipei, however, said, "we believe the value of having in-house LCD panel support remains unclear."

Lee gave a "hold" rating on Innolux with a target price at NT$53 due to concerns about weakening monitor panel prices next quarter and short-term selling pressure from employees.

Shipment of LCD monitors would also more than double to 17.5 million units, which makes Innolux the world's second-largest maker of computer monitors, from 7 million last year, Tuan said.

Innolux supplies computer monitors to the world's two biggest computer vendors Dell Inc and Hewlett Packard Co as well as other smaller PC brands.

To tap into the fast-growing LCD TV market, Innolux plans to build a 7.5-generation plant in 2008 at the earliest. Innolux now makes LCD panels at 4.5-generation and fifth-generation (5G) factories.

With the new capital injection, Innolux said it would boost its monthly output of LCD panels used in computers to 80,000 substrates from the current 66,000 sheets.

In addition, the production of small-sized flat panels mainly for handsets would expand to 40,000 substrates a month from the current 32,000, the company said.

Innolux shares slid 0.6 percent to NT$57.4 from NT$57.74 on the grey market yesterday.

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