Thu, Jul 09, 2009 - Page 12 News List

Q4 profit possible, says Chunghwa Picture Tubes Ltd

PANELS REBOUNDING:The company said flat panel sales had helped its total revenues reach a seven-month high last month of NT$4.48 billion


Chunghwa Picture Tubes Ltd (中華映管), the nation’s third-largest flat panel maker, said yesterday that it might see profits by the end of the year as panel prices rebound to above cost.

Reviving demand has helped boost the prices for liquid-crystal-display (LCD) panels, which are used mostly in computers and TVs, over the past four months and is likely to extend into this month as an insufficient supply of key component glass substrate has limited increases in panel output.

That may help panel suppliers return to the black earlier in the third quarter.

Lagging its bigger rivals by one quarter, Chunghwa Picture “may have the chance to return to the black in the fourth quarter,” chairman Lin Wei-shan (林蔚山) told reporters in Kaohsiung yesterday.

He cited better panel prices and improving factory usage as key factors.

“Prices for certain panels have risen to a level higher than our cost,” Lin said. “[We] see some advantage in small and medium-sized panels.”

Chunghwa Picture said sales from its flat-panel business increased 14.5 percent to NT$3.95 billion (US$120 million) from last month’s NT$3.44 billion, helping the company’s total revenues last month hit a seven-month high of NT$4.48 billion.

That brought the company’s second-quarter revenues to NT$12.57 billion, up 28 percent quarter-on-quarter, or down 64 percent annually.

Lin said Chunghwa Picture also benefited from the Chinese government’s economic stimulus measure, which subsidized LCD TV purchases.

The company mostly supplies panels to Fujian-based TV maker Xiamen Overseas Chinese Electronics Co (廈華電子), in which Chunghwa Picture holds a 36 percent share.

Lin said Chunghwa Picture planned to introduce a strategic partner within a month or two, replacing foreign venture capital firm Warburg Pincus.

Warburg Pincus now owns US$250 million of the company’s convertible bonds.

The venture capital firm will be able to exercise the right to sell the six-year bonds to the company next month on the first anniversary of the issuance.

Chunghwa Picture is also seeking new growth engines in the areas of touch panels and electronic readers, Lin said.

The company’s stock rallied by 6.84 percent to NT$4.84 yesterday amid speculation that it had obtained approval from Chinese regulators to buy a controlling 71 percent stake, or 500 million shares, in the Chinese electric maker Mindong Electric (Group) Co (閩東電機).

Mindong, which is listed on China’s A-share stock market, in turn would own a 75 percent share of four Chinese companies affiliated with Chunghwa Picture, the Taiwanese company said.

The deal would help Chunghwa Picture obtain bank loans in China more easily, it said.

Separately, local rivals AU Optronics Corp (友達光電) and Chi Mei Optoelectronics Corp (奇美電子) said yesterday that they expected third-quarter sales to increase from the previous three-month period because of the global glass shortage and increasing Chinese demand.


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