Gunze Ltd, Japan’s third-largest maker of touch screens used in products such as Apple Inc’s iPhone, said it aims to triple production at its Taiwan display-film venture to meet demand from smart phones. The stock rose.
The 51 percent owned venture, Jun Hong Optronics Corp (郡宏光電), will probably meet the production target in two years as demand increases 50 percent annually, managing director Shigeru Kaseyama said in an interview at the company’s Osaka headquarters on Thursday. The film business is expected to become profitable from next fiscal year, he said.
The stock rose the most in three weeks in Tokyo as sales of display film could help offset the drop in revenue from Gunze’s main apparel operations. The global market for mobile-phone touch screens will more than double over three years by 2012, estimates by Daiwa Securities Group Inc showed.
“The company’s challenge has been how to diversify its earnings amid the tough environment for apparel makers,” said Shigeo Kikuchi, an equity manager at Tokyo-based Takagi Securities Co. “The shares reacted positively to the news about boosting production capacity.”
Gunze rose ¥7 to close at ¥330 (US$3.65) on the Tokyo Stock Exchange, extending the stock’s gain this year to 12 percent. The shares have underperformed the benchmark Nikkei 225 Stock Average after the company in October cut its earnings forecasts.
The firm, whose apparel business accounts for more than 50 percent of sales, forecasts net income will fall 23 percent to 1.2 billion yen in the year ending March next year as revenue drops 6 percent.
Gunze accounted for 8.7 percent of the Japanese touch-panel market in Japan last year, third behind Nissha Printing Co and Wacom Co, DisplaySearch said.
Production at the Taiwan venture, 49 percent owned by Kaohsiung, Taiwan-based Wah Hong Industrial Corp (華宏新技), will start as early as February and initially roll out as much as 30,000m² of display film a month, Kaseyama said.
The global market for mobile-phone touch panels is expected to more than double to about US$2 billion by 2012 from US$811 million this year, Daiwa analyst Yoshiki Yuge wrote in a report on Oct. 22.
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