Innolux, AUO sales soar year-on-year in Q1

Taipei--Innolux Corp. (??) and AU Optronics Corp. (AUO, ??), the two largest flat panel makers in Taiwan, saw their sales for the first quarter of this year soaring at a high double-digit pace from a year earlier, as market analysts attributed the growth to a spike in product prices.

For the January-March period, Innolux posted NT$86.03 billion (US$2.81 billion) in consolidated sales, jumping 52.5 percent from a year earlier after the flat panel supplier generated NT$31.35 billion in consolidated sales for March alone, up 67.6 percent year-on-year.

For its part, AUO recorded NT$88.56 billion in consolidated sales for the first quarter, up 24.5 percent from a year earlier after the manufacturer posted NT$31.05 billion in revenue for March alone, up 18.2 percent year-on-year.

Higher product prices in the first quarter offset the impact resulting from slow season effects in the global panel industry, so Innolux's three-month sales figure fell only 3.8 percent from a quarter earlier, and AUO's dropped at a minor pace of 3.6 percent, analysts said.

In the first quarter, prices of 40-65-inch panels rose 4.4 to 11.1 percent from a quarter earlier, which boosted Innolux's and AUO's gross margin, the difference between revenue and cost of goods sold, and eventually lifted their profitability, analyst added.

They said that the strong showing in March pushed up the two panel makers' revenue significantly for the entire quarter, adding that Innolux and AUO could post more than NT$10 billion in net profit for the quarter despite slow season effects at a time when screen demand was tight, which sent product prices higher.

In the fourth quarter of last year, Innolux's net profit stood at NT$10.87 billion, while AUO's hit NT$8.97 billion.

Analysts said that Innolux and AUO both benefited from rising shipments in TV panels, in particular in large-sized TV screens when major clients, including Samsung Electronics Co., kept placing orders to build its inventories to meet solid global demand in March.

That month, shipments of Innolux's large-sized panels used in TVs, desk top computers and notebook computers rose 20.5 percent from a month earlier to 10.23 million units, while AUO shipped about 9.84 million units of large-sized screens, up 10.4 percent from a year earlier.

In a research note, a U.S.-based brokerage, which has been upbeat about the two flat panel firms' outlook, has maintained a "buy" rating on Innolux and AUO shares and left a target price of NT$17.1 on the two stocks unchanged.

On Friday, Innolux closed up 3.57 percent at NT$13.05 and AUO ended 0.83 percent higher at NT$12.15 on the Taiwan Stock Exchange. The brokerage's target price showed that there is room for the two stocks to move higher.

CNA cannot identify the brokerage because media outlets in Taiwan are not allowed to report the name of a foreign brokerage when it gives price forecasts for specific stocks.

Source: Focus Taiwan News Channel