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Shares of TPK rally on Q2 results

2012/08/10 11:52:54

Taipei, Aug. 10 (CNA) Shares of TPK Holding Co., one of Taiwan's leading touch panel suppliers, staged a rally Friday morning after the company reported better results for the second quarter, dealers said.

The current buying also reflected optimism toward TPK's earnings outlook for the second half of this year on expectations that the launch of tablet computers and ultrabook computers bundled with Microsoft's Windows 8 operating system will boost shipments, they said.

As of 11:23 a.m., shares of TPK had added 7 percent, the maximum daily increase, to NT$381.50 (US$12.75) with 11.67 million shares changing hands. The benchmark weighted index was down 0.04 percent at 7,430.49 points.

"The higher second quarter profit resulted from a better product portfolio in which medium- and large-sized touch panels weighed more and commanded higher profit margins," Horizon Securities analyst Benson Huang said.

At an investor conference held Thursday, TPK reported NT$2.94 billion in net profit or NT$9.24 per share for the second quarter, compared with NT$2.62 billion in net profit or NT$8.27 per share recorded in the first quarter.

During the April-June period, TPK's gross margin rose to 16.7 percent, up 2.6 percentage points from a quarter earlier.

"An increase in medium- and large-sized touch panel shipments is expected to further lift TPK's gross margin by about 2 percentage points in the second half of this year," Huang said.

According to TPK, the debut of the Windows 8 operating system is expected to raise buying interest in notebook computers equipped with touch panels. The company said it has won about 75 percent of the global orders in touch panels for ultrabook computer use.

"After the investor conference, more and more investors have embraced high hopes that demand for touch panels due to the Windows 8 operating system presence will make up a loss of Apple's orders in the second half," Huang said.

The market has widely anticipated Apple will use in-cell touch panels for its iPhone 5, instead of on-cell panels that TPK used to provide for the earlier versions of Apple's smartphones.

For the first half of this year, TPK posted NT$17.51 in earnings per share (EPS), having made itself the top earner among the local listed companies in terms of EPS so far.

"Its possible for TPK to earn NT$38-NT$40 in EPS for 2012," Huang said. "Based on the expected earnings, TPK shares appear cheap."

Huang said several foreign institutional investors, such as Morgan Stanley, Merrill Lynch and Goldman Sachs, have resumed buying in the stock.

On Thursday, foreign institutional investors bought a net of 813,173 TPK shares on the Taiwan Stock Exchange.

(By Frances Huang)