Chunghwa Picture Tubes Ltd (
To ensure the supply of small and medium panels, Chunghwa Picture decided to establish a plant in China, most likely at its manufacturing base in Fuzhou, chief financial officer and spokesman James Wu (
The LCD panel module factory is expected to start mass production in May or June next year, he said.
SUPPLY RESTRICTIONS
Chunghwa Picture is hoping to reduce its reliance on suppliers, as it procures small and medium-sized LCD panel modules from companies who are struggling to keep up with increasing orders from Chunghwa Picture for next year, Wu said.
Orders of small and-medium-sized panels for next year have exceeded more than 30 percent of Chunghwa Picture's capacity, Wu said.
Shipments of Chunghwa Picture's small and medium-sized panels are expected to reach 60 million pieces this year. As demand for the segment of products recovers, the company hopes to ship 106 million small and medium-sized panels next year.
PRICE REBOUND
Chunghwa Picture's earnings for the third quarter jumped by 210.4 percent from a year ago on strong demand and a rebound in average selling prices. Net income was NT$5.11 billion (US$157.76 million) -- or NT$0.6 per share -- compared with a deficit of NT$4.63 billion a year earlier.
Sales were NT$46.35 billion, a 42.5 percent increase from last year and 23.3 percent up from the second quarter.
Gross margin in the third quarter improved to 20 percent from 11 percent in the second quarter.
STRATEGIC PARTNERS
Banking on the bright industry outlook, Chunghwa Picture plans to expand capacity with its strategic partners, chairman Lin Wei-Shan (
The company's new partners and its plans for expansion will be unveiled in the next couple of months, Lin said.
The flat-panel maker announced in September it would introduce Warburg Pincus, a US private equity fund, as its new strategic partner. Warburg Pincus agreed to invest US$250 million in Chunghwa Picture through a private placement of overseas convertible corporate bonds.
If the US private equity investor converted all the bonds into common shares, it would hold a 10.2 percent stake in Chunghwa Picture -- making it the third-largest shareholder after home appliances maker Tatung Co (大同) and subsidiary Chunghwa Electronics Investment Co (中華電子投資).
The conversion rate was set at NT$8.5 per share. Shares of Chunghwa Picture closed down 4.37 percent to NT$12.05 on Friday.
Chunghwa Picture is scheduled to hold an ad hoc shareholder meeting on Nov. 19 to pass the private placement.
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