Innolux Corp (群創光電) yesterday announced it plans to double its capital spending next year to NT$40 billion (US$1.32 billion) from about NT$19 billion this year after posting its best net profit in four years for last quarter.
The nation’s top LCD panel maker’s capacity expansion plan aims to alleviate the consistent tight supply of TV panels this year. It also comes amid easing fears of overcapacity in the industry.
“Over the past years, we largely invested in technology upgrades. Next year’s spending will be mostly on capacity expansion,” Innolux chairman Tuan Hsing-chien (段行建) told investors in a teleconference.
New capacities are expected to come out in the second half of next year from Innolux’s 6G plant and from a 8.5G plant, Tuan said. The 6G factory currently produces flat panels used in notebook computers, tablets and TVs, while its 8.5G plant produces TV panels, he said.
Improvement in profitability and financial structure provides some leeway for the company to make further capacity investments next year, Tuan said.
In the quarter ending on Sept. 30, net income more than doubled to NT$7.36 billion, from NT$3.01 billion in the second quarter. The figure marked the highest level since the second quarter of 2010, when the company made NT$9.5 billion in net profit.
Earnings per share were NT$0.77 last quarter, compared with NT$0.33 in the second quarter.
The company’s earnings before interest, taxes, depreciation and amortization margin rose to 20.9 percent last quarter, from 19.4 percent in the previous quarter, but was lower than the 23.6 percent posted a year earlier.
Net debt-to-equity ratio shrank to 40.2 percent last quarter from the peak of 153 percent in the second quarter of 2012, Tuan said.
Due to this improvement, Innolux may consider putting off, or even suspending the ongoing sales of new shares via global depositary receipts (GDR) to raise US$9.36 billion, Tuan said, citing the recently poor local stock market.
Looking ahead, Innolux president Wang Jyh-chau (王志超) said that in “the third quarter, we saw severe supply constraints. Now, the overall supply-and-demand situation looks healthy in the fourth quarter.”
“However, TV panels are still in short supply,” Wang said.
Overall, shipments of PC and TV panels will slide slightly this quarter from last quarter’s 12.67 million units, while average selling prices will hold steady, Wang predicted. He said shipments and average selling prices for small and medium panels would decline by a double-digit percentage sequentially this quarter.
Shares of Innolux rallied 2.22 percent yesterday ahead of the release of the third-quarter results.
Rival AU Optronics Corp (友達光電) gained 1.82 percent yesterday after it said on Wednesday its third-quarter net profit hit NT$7.3 billion, a 17-quarter high.
The TAIEX fell 0.18 percent yesterday.
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