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Prime View posts record earnings for last quarter

Taiwanese liquid-crystal-display (LCD) panel maker Prime View International Co (元太科技) yesterday posted record high quarterly earnings for the last quarter, supported by better-than-expected demand for its high-margin products, and said it expected explosive growth this year.

In the final quarter of last year, net income rose to NT$561 million (US$17.29 million), or NT$0.92 per share, from NT$13.88 million, or NT$0.03 a share, a year earlier, Prime View's statement said. Revenues jumped 74.5 percent year-on-year to NT$3.21 billion.

"The results greatly exceeded my expectation of NT$400 million," said Jeff Pu (蒲得宇), a panel industry analyst with Yuanta Core Pacific Securities (元大京華證券).

Gross margin also hit a new high of 21.6 percent in the fourth quarter last year, compared to 13.2 percent in the same period of 2006, on increased shipments of high-margin handset screens and panels for the aviation and marine industries, the company said.

The growth momentum would extend into this year, supported by increasing demand for niche screens used in electronics readers such as the US online retailer Amazon.com Inc's Kindle and other products, Prime View chairman Scott Liu (劉思誠) said during a press briefing yesterday.

"Prime View will hit a lot of new record highs in 2008," Liu said.

Gross margin this year would be an all-time high 20 percent and revenues may grow faster in the wake of an output expansion following the acquisition of bankrupt BOE-Hydis Technology Co.

"Prime View's growth was limited by its insufficient capacity in the past," Liu said. "Now BOE-Hydis will help us resolve this problem."

Output may increase 48 percent this year after the NT$9.3 billion acquisition is completed in March, Liu said.

Prime View aims to turn around the unprofitable BOE-Hydis this year, Liu said.

"I think the goal is reachable as Prime View's orders will be sufficient enough to boost BOE-Hydis' utilization rate to a healthy level," Pu said.

That may offset the risk of equipment adjustments and the possible difficulties in managing a different corporate culture, he said.

Pu gave Prime View shares a "buy" rating, with a 12-month target price of NT$46, implying a 47 percent upside from the closing price of NT$31.3 yesterday.

Looking ahead, revenues may slide 10 percent quarter-on-quarter as demand for consumer electronics weaken in the slack first quarter, company spokesman Stephen Chen (陳新宇) said.

"But, the first quarter will be a much better period when compared to the same period last year, which will help sustain gross margins at the fourth quarter level," Chen said.

Besides, rising demand in niche markets and recovering demand for mobile phone screens after the Lunar New Year would also support the first quarter performance, Liu said.
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