AUO shares gain amid Q3 optimism

Taipei, Shares of AU Optronics Corp. (AUO), one of Taiwan's largest flat panel makers, moved higher Friday as investors were encouraged by optimism toward the third quarter, the company said in an investor conference held a day earlier.

The current buying also reflected a strong showing by AUO's American depositary receipts (ADRs) in the U.S. market overnight as investors rushed to pick up bargains after the stock's recent consolidation, the company said.

Shares of AUO rose 2.83 percent to close at the day's high of NT$12.70 (US$0.42) with 131.43 million shares changing hands on the broader market, where the weighted index ended up 0.59 percent at 11,075.78 points.

Soon after the local equity market opened, AUO shares trended higher as investors were impressed by the company's assessment of its outlook for the July-September period, and momentum continued into the end of the session, dealers said.

"AUO shares had been consolidated for some time as the global flat panel industry had been bothered by falling large flat screen prices in the second quarter," Ta Ching Securities analyst Jerry Chen said.

"Now investors shrugged off AUO's second-quarter results and set sights on the peak season effects in the third quarter, thinking that a low point in the second quarter was a thing of the past. It was no surprise that the stock moved higher today."

Chen said a 2.91 percent increase in AUO's ADRs overnight also reflected this mentality.

In the investor conference, AUO said the global flat panel business had been adjusting inventories recently, and inventory levels have come to a healthy level. More importantly, AUO said, the company is preparing itself for the peak-season effect in the third quarter by getting ready for higher shipments.

AUO said it will continue to push for technology innovation to boost its global competitiveness in a bid to secure more orders in the global market.

In the second quarter, AUO posted NT$1.25 billion in net profit, down 70.9 percent from a quarter earlier, with Chen attributing the decline to falling large-sized panel prices at a time of higher supply. However, it was the eighth consecutive quarter for AUO to report a net profit.

Its earnings per share (EPS) for the second quarter stood at NT$0.13, compared with NT$0.45 in the first quarter.

AUO said its gross margin -- which reflects the difference between revenue and cost of goods sold -- fell to 9.7 percent in the second quarter from 10.9 percent in the first quarter, while its operating margin -- the difference between sales and the cost of goods sold and operating expenses -- also dropped to 2.8 percent from 4.0 percent.

During the July-September period, AUO shipped 27.98 million large-sized panels, down 2.1 percent from a quarter earlier, while shipments of small- and medium-sized screens also fell 2.7 percent to 45.32 million units.

In the first half of this year, AUO posted NT$5.56 billion in net profit, with EPS of NT$0.58.

Chen said it is possible for AUO shares to continue an uptrend in the short term, but "investors should pay close attention to strong technical resistance ahead of NT$14."

Source: Focus Taiwan News Channel