Wed, Aug 01, 2007 - Page 12 News List

Chunghwa Picture posts profits

SMOOTH SAILING The company made a smart bet on small and medium-sized LCD panels as red hot demand in the sector seems likely to continue, analyst Eric Lin said


Chunghwa Picture Tubes Ltd (中華映管), the nation's third-largest liquid-crystal-display (LCD) panel maker, swung into profits last quarter on the back of higher panel prices, a company executive said yesterday.

The company posted a second-quarter net income of NT$504 million (US$15.4 million), the first quarterly profits since the fourth quarter in 2005.

This compares to a net loss of NT$5.78 billion in the second quarter last year and NT$3.07 billion in the first three months.

Sales rose 35.5 percent from a year earlier to NT$37.6 billion in the second quarter, while gross margins jumped to 10.6 percent from 6.8 percent.

"We see that demand will exceed supply for small and medium screens during the second quarter, especially for products like portable DVD players, digital photo frames and global positioning systems," company chairman Lin Wei-shan (林蔚山) told investors.

Chunghwa Picture forecast it would post a profit this year, compared with a record loss last year, because of higher panel prices.

"Our profitability has improved every month since we started to turn profitable in May," Lin said.

Chunghwa Picture hopes to generate NT$2 billion in profits per month by the end of this year, Lin said.

Bigger South Korean rival LG Philips LCD Co earlier this month reported its first quarter profit in five quarters.

The average price of an LCD panel measuring at least 10 inches diagonally rose 11 percent to US$133 in the second quarter, from US$120 in the first quarter, Taoyuan-based Chunghwa Picture said.

Prices may rise as much as 5 percent in the current quarter, chief financial officer James Wu (巫俊毅) said yesterday.

Shipments of large panels rose 11.4 percent to 6.9 million units, according to its statistics.

"Chunghwa Picture showed impressive performance in rescuing profitability," said Eric Lin (林宜正), an analyst with Yuanta Core Pacific Securities (元大京華證券).

It made a smart bet by pursuing small and medium-sized panels, as red hot demand in the sector seems likely to continue throughout next year, he said.

But Chunghwa Picture should only manage to totally offset the first-quarter loss in the third quarter, lagging behind its smaller rival HannStar Display Corp (瀚宇彩晶), which offset its first-quarter loss in the second, Lin said.

Chunghwa Picture said its performance in the third-quarter should be very positive.

Total sales should rise 10 percent over the second quarter, while gross margins of panels should hit as much as 20 percent, it said.

Shipments of small and medium screens should grow 23 percent sequentially to 17.3 million units, according to the company's vice president, Lin Sheng-chang (林盛昌).

"They will continue to grow stably in the near future," he said.

The company's capital spending is NT$12.8 billion, down from last year's NT$18.2 billion.

The company said it was looking for partners, especially from the upstream supply chain, to invest in next-generation fabs, but no plans have been finalized.

Shares of Chunghwa Picture were up 1.4 percent to close at NT$9.38 on the Taiwan Stock Exchange yesterday.


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