Giantplus buying older plant from panelmaker CPT

Chunghwa Picture Tubes Ltd (CPT, 中華映管), the nation's third-largest maker of flat panels, signed an agreement with Giantplus Technology Co (凌巨) yesterday to sell a less advanced plant for NT$6.5 billion (US$200.6 million) to the handset screen maker.

The deal comes amid resilient demand for flat panels, especially small-and-medium screens for consumer electronics such as digital photo frames, and spreading optimism about a panel shortage next year.

CPT will receive NT$1.97 billion in cash from Giantplus and subscribe to 128 million new shares issued by Giantplus via private placement in the near future.

CPT will own a 30 percent stake in the Miaoli-based company following the share sale and will become the largest shareholder of Giantplus, exceeding current major shareholder Sunplus Technology Co (凌陽科技).

"The deal will help CPT tap into small-and-medium module market," CPT president Chiu Chuang-yi (邱創儀) told a press conference yesterday.

"We will jointly develop new products to satisfy customer's demand for small panels used in different devices such as mobile phones," Chiu said.

CPT said that it would book NT$2.97 billion in gains from the transaction, which is scheduled to close as early as January.

CPT is currently cutting mobile phone panels and 7-inch panels for consumer electronics from the 40,000 sheets of 550mmx670mm substrates a month at the factory.

"Having this plant, we will have more opportunities of getting orders from first-tier mobile phone brands," Giantplus chairman Huang Chou-chye (黃洲杰) said.

Giantplus currently supplies most of its handset screens to Chinese companies and South Korea's LG Electronics Inc.

CPT will still make computer and television TFT panels at one fourth-generation (4G), two 4.5G and one sixth-generation (6G) plants.

"We are positive about the deal, which will bring more profits in the long run," said Eric Lin (林宜正), who tracks the LCD industry for Yuanta Core Pacific Securities (元大京華證券).

Though the price was slightly lower than a similar deal between HannStar Display Corp (瀚宇彩晶) and Wintek Corp (勝華), CPT would benefit from the growth of the small-and-medium industry via its holding in Giantplus Technology, Lin said.

For Giantplus, the benefits would come from being able to secure LCD panels next year, when almost all panel makers expect demand will exceed supply, Lin said.

Shares of Giantplus jumped nearly to the 7 percent daily limit to NT$49.75 yesterday before the deal was announced.

CPT shares advanced 6.64 percent to NT$12.85, versus 0.38 percent gain on the main bourse.