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AUO, Chimei Innolux shares rally on product price rebound

2012/04/13 17:14:40

Taipei, April 13 (CAN) Shares of flat panel makers AU Optronics Corp. (AUO) and Chimei Innolux Corp. staged a rally Friday after TV screen prices enjoyed a rebound in early April, dealers said.

The recovery in flat panel prices prompted many investors to buy into the two major Taiwanese manufacturers to take advantage of their relatively low valuations in hopes that product prices will continue to rise due to falling inventories, the dealers said.

Retail investors, in particular, rushed to chase prices of the two stocks during the trading session after they were encouraged by recent strong buying interest from foreign institutional investors, they added.

AUO shares closed up 4.11 percent at NT$15.20 (US$0.52) with 88.29 million shares changing hands, while Chimei Innolux shares ended up 2.17 percent at NT$14.10 on trading volume of 46.35 million. The benchmark weighted index closed up 1.63 percent at 7,788.27 points.

In the past four trading sessions, foreign institutional investors served as net buyers of 19.78 million AUO shares and 20.11 million Chimei Innolux shares.

Market analysts said the strong interest in the two stocks came as many investors are expecting the two companies' profitability to improve in 2012 due to recovering TV screen prices.

According to market advisory firm DisplaySearch, TV screen prices rose by a range between US$1 and US$2 per unit in early April.

In a recent research note, HSBC Securities said it expects flat screen prices will continue to rise for the rest of the second quarter of this year, adding that prices are likely to gain between 2 and 3 percent from the first quarter.

Analysts said the latest price recovery reflected a buying spree in China's TV market ahead of the prolonged holiday for the upcoming May 1 Labor Day.

They said that since flat panel inventories have fallen to a healthy level and production capacity has become tighter since recent production adjustments, flat panel makers such as AUO and Chimei Innolux are expected to see their sales boosted by higher product prices.

HSBC Securities maintained an "overweight" recommendation on AUO and Chimei Innolux shares.

(By Pan Chi-i and Frances Huang)