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HannStar reports record quarter

HannStar Display Corp (瀚宇彩晶), one of the nation's flat panel makers, yesterday reported record quarterly profits, benefiting from improved demand and gains from selling a plant.

HannStar also reported plans to start making liquid-crystal-display (LCD) panels used in consumer electronics such as 7-inch portable DVD players in June. This move follows in the steps of bigger rivals including AU Optronics Corp (友達光電) in tapping into the fast-growing area.

"It is a trend for LCD panel makers to allocate more production to make small and medium screens as demand is reaching an economy of scale," said Roger Yu (游智超), an analyst with Polaris Securities Co (寶來證券).

"Taiwanese and Korean players will benefit from the demand because of their strong cost reduction," he said.

IMPROVEMENTS

HannStar said net income jumped to NT$9.08 billion (US$282 million) in the final quarter of last year, compared to NT$998 million in the same period of 2006. On a quarterly basis, the growth is about 48 percent.

HannStar racked up NT$6.93 billion in gains from asset disposal last quarter from selling a less advanced third-generation (3G) plant to local mobile phone screen maker Wintek Corp (勝華科技) for NT$9 billion in December.

FULL LOAD

Looking ahead, company president Paul Chou (周定輝) said he expected "demand to regain momentum in February and March from stagnancy in January and December."

HannStar's factory would be fully loaded this quarter as orders from customers such as Samsung Electronics Co and Dell Inc were almost reaching the company's maximum supply capacity, Chou said.

But slack demand for screens used in computer monitors would decrease prices by "a high single digit percent" from US$141 per unit last quarter, extending a 3.4-percent quarter-on-quarter drop, he said.

Shipments would drop by "a high single digit percent" in the first three months of this year from last quarter's 4.93 million units in the wake of the deal with Wintek, Chou said.

PRODUCT RANGE

To broaden its product portfolio, HannStar planned to make flat screens for a wide-range of consumer gadgets ranging from portable DVD players and digital photo frames to low-cost notebook computers, Chou said.

"We believe the demand for medium-size panels will grow fast," Chou said. "And I don't think supply increase will drive prices down significantly because the demand is on the rise."

To better utilize the company's factory, HannStar planned to "allocate at least 20 percent of capacity from the fifth-generation [5G] plant to make medium-sized screens," vice president Chou Chi-hao (周志豪) told investors.

The panel maker aimed to make 10 million LCD panels with sizes from 7 inches to 11 inches this year.

To support the manufacturing of new products, HannStar planned to spend NT$2.5 billion on new equipment, down 29 percent from NT$3.5 billion.
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