Thu, Dec 25, 2014 - Page 14 News List

AUO, Innolux stocks soar

FLAT PANELS RISE:Shares of the nation’s largest flat-panel makers are benefiting from Christmas season demand for screens, boosting the electronics sector

Staff writer, with CNA

Shares of AU Optronics Corp (AUO, 友達光電) and Innolux Corp (群創), the two largest flat-panel manufacturers in Taiwan, soared in heavy trading yesterday morning as screen prices were driven up by strong demand during the Christmas shopping season, dealers said.

Solid demand for TVs in the global market could boost the two companies’ shipments and improve their bottom lines for the fourth quarter, they said.

Led by AUO and Innolux, the bellwether electronics sector steamed ahead, helping the broader market climb out of the doldrums it was mired in a session earlier, dealers said.

AUO shares rallied 6.93 percent to NT$16.2, while Innolux’s stock price added 5.39 percent to reach NT$15.65.

The TAIEX inched up 0.71 percent to 9,162.70.

“The current buying largely reflects AUO and Innolux’s higher pricing power, as global demand has been on the rise,” Asia Securities Investment Consultant (亞洲投顧) analyst Chang Chih-cheng (張智誠) said.

“Judging from the strong economic growth in the US, consumption there has been very strong. Consumer electronics, such as TVs, could record good sales during the Christmas season,” Chang said.

In the third quarter, the US economy grew 5 percent, beating an earlier estimate for a 3.9 percent rise.

Echoing Chang, market information advisory firm DisplaySearch said that prices of 32-inch TV panels have risen 6 to 8 percent in the fourth quarter from a quarter earlier, while prices quoted for 40-inch and 50-inch TV screens have also gained 2 to 3 percent over the same period. TV panels are a major source of revenue for AUO and Innolux, accounting for more than 40 percent of their total sales.

“I expect that the two companies will have a good fourth quarter. Even better, the flat-panel business is expected to continue its momentum into the first quarter of next year on strong demand in China ahead of the Lunar New Year holiday,” Chang said.

The market expects AUO and Innolux to experience sequential sales growth of 5 percent and 3 percent respectively in the fourth quarter, with both set to remain profitable.

In the third quarter, AUO had sales of NT$106.87 billion (US$3.36 billion) and Innolux had sales of NT$113.09 billion.

Chang said that due to the upturn posted by the two firms, the electronics sub-index was up 0.63 percent, helping bolster the broader market. The optoelectronics sub-index also rose, adding 2.14 percent.

“But investors should pay attention to a possible technical pullback for AUO shares as the stock moves closer to NT$18.16,” Chang said.

He said that Innolux could have more room to go up before it reaches NT$21.49.

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