Taipei, Dec. 21 (CNA) Shares of Chimei Innolux Corp. and AU Optronics Corp. (AUO), top two flat panel suppliers in Taiwan, moved lower Friday morning as asking prices for screens fell in December from a month earlier, dealers said.
The selling reflected fears that the global flat screen business is in a slow season in the fourth quarter of this year, which will continue into the first quarter of next year and affect the sector's pricing power, dealers said.
As of 11:19 a.m., shares of Chimei Innolux had dropped 4.57 percent to NT$16.70 (US$0.57), with 133.95 million shares changing hands, while shares of AUO had shed 4.24 percent, falling to NT$13.55 on trading volume of 108.18 million shares.
The benchmark weighted index on the Taiwan Stock Exchange was down 1.15 percent at 7,507.75 points.
"The two stocks had attracted large buying in recent trading sessions as investors were looking forward to an improvement in their bottom lines," Grand Cathay Securities analyst Jeff Chang said.
"This morning, investors simply seized the news of lower product prices as a reason to lock in the gains they had built," Chang said.
According to WitsView, a display panel research unit under Taiwan-based TrendForce, asking prices of panels for notebook computers fell 0.1-0.2 percent in December from a month earlier, while prices of screens for desktop computers dropped about 0.5 percent.
However, TV screen prices remained unchanged from November, WitsView said.
"A rising streak in TV screen prices in October and November has halted this month," Chang said. "I expect panels for TVs, notebook computers and desktop computers will trend lower in January and February on the slow season effect."
The analyst said asking prices in March will depend on how Chinese buyers restock panels to meet expected higher demand during the Labor Day holiday in early May.
As the global flat panel business has bottomed out from a long term down cycle, however, Chimei Innolux and AUO are expected to see improved profitability next year, Chang said.
"In particular, Chimei Innolux is likely to turn a profit in the fourth quarter, posting about NT$500 million in net profit for the quarter," but AUO in unlikely to become profitable until next year, he said.
In the third quarter, Chimei Innolux incurred NT$3.7 billion in net loss, but the figure was an improvement from its loss of NT$9.6 billion in the second quarter. Its gross margin in the third quarter stood at 3.2 percent, improving from minus 1.8 percent in the second quarter.
Chang said Chimei Innolux is expected to post about NT$1 in earnings per share for 2013, while AUO is likely to record NT$0.5-NT$1 in EPS next year.
(By Frances Huang)