Major display panel makers saw share prices rise yesterday, after a Citigroup equity analyst recommended a "buy" rating for both AU Optronics Corp (AUO, 友達光電) and Chi Mei Optoelectronics Corp (奇美電子) on a positive earnings outlook.
The Citigroup report, written by George Chang (
Chang also raised his 12-month target share prices of AU Optronics to NT$88 from the NT$78 he had given previously.
In another report to his clients also issued on Dec. 24, Chang said Chi Mei Optoelectronics would post another record quarterly profit of NT$21 billion, or an EPS of NT$3.1, in the three months between October and this month.
For this year, the company is likely to see an EPS of NT$5.4, he said.
Consequently, Chang revised his target price upward for Chi Mei to NT$56 from NT$51.
Boosted by the upgrade estimates, shares of AUO, the world's third-largest maker of liquid-crystal-display (LCD) panels, jumped 4.1 percent to NT$60.9 on the Taiwan Stock Exchange yesterday, while those of Chi Mei Optoelectronics, the nation's second-largest maker of LCD panels, advanced 3.84 percent to NT$44.65.
The market is concerned with panel makers' inventory levels and the industry's continued price decline, but Chang appeared upbeat about the two companies' upside potential throughout the first half of next year.
"Even after factoring a sizable price decline in the coming months ... we believe AUO can still easily generate between NT$4 and NT$5 EPS in the first half of 2008," Chang wrote.
As for Chi Mei, Chang said the Tainan-based company should see higher-than-average shipments growth, after the second phase of its 7.5-generation plant will start to ramp up by the middle of next year.
On the other hand, as the panel prices remain stable, Chang expected the company to post another 40 percent earnings growth next year, the Citigroup reports said.
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