Shares of AU Optronics Corp (AUO, 友達光電), the second-largest LCD panel maker in the nation, yesterday plunged to a 15-month low as panel prices continued their downward spiral amid an across-the-board supply glut.
The bearish sentiment yesterday drove AUO shares down 4.8 percent to NT$9.71, less than the stock’s NT$10 par value, with 132 million shares changing hands.
Shares of AUO’s larger domestic rival, Innolux Corp (群創), plunged by 7.24 percent to end at NT$10.25.
The declines came after market researcher DisplaySearch said that a surplus of mainstream 32-inch TV panels drove supply down, with panel prices falling 4 percent to as low as US$73 per unit in the first half of this month from the second half of last month, the largest drop among TV panels of all sizes.
Prices for 42-inch and 48-inch TV panels fell by 1 percent and 3 percent respectively in the first two weeks of this month from the two weeks prior, despite the industry entering a high season, DisplaySearch said on Wednesday.
As the price decline was “heavier” than expected, DisplaySearch said that some TV makers face an excess of panel inventory and are aggressively asking for larger price concessions from panel makers. With panel prices still higher than the cost levels for most panel suppliers, some Chinese companies plan to maintain high factory utilization and stick to their new production ramp-up plans, the researcher said.
AUO yesterday posted a 10.4 percent decline in revenue for last month to NT$27.39 billion (US$862.54 million) from NT$30.56 billion in June, a reflection of sluggish demand.
The company’s shipments of PC and TV flat panels fell by 4 percent to 7.72 million units from 8.05 million units in June. Shipments of small and medium-sized panels rose by 3.5 percent to 17.47 million units from 16.88 million units in June.
In the first seven months of the year, total revenue contracted by 7.2 percent to NT$215 billion from NT$231.61 billion in the same period last year.
Concerned with the persistent oversupply, JPMorgan Securities Ltd has advised investors to stay away from the sector.
In a report released on Wednesday, JPMorgan cut its earnings forecast for AUO to NT$12.3 billion this year, compared with its previous estimate of NT$18.2 billion. Next year, AUO is expected to post a loss of NT$9.5 billion, rather than a loss of NT$400 million as originally forecast, the brokerage said.
Last week, AUO gave a lackluster outlook for this quarter, expecting shipments of PC and TV panels to shrink by a single-digit percentage from last quarter due to weak demand and inventory correction.
JPMorgan retained its “underweight” rating on AUO shares.
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