Chunghwa Picture Tubes gets boost following plant disposal
CNATAIPEI -- Shares of Chunghwa Picture Tubes Ltd., one of Taiwan's second-tier flat panel makers, moved sharply higher Friday after the company sold a large screen module plant in China's Shenzhen to China Star Optoelectronics Technology Corp. (CSOT), which is based in the Chinese city.
March 16, 2013, 12:06 am TWN
Many investors expect the asset disposal to speed up the pace of the Taiwanese firm's efforts to focus on small- and medium-sized display production as it shifts attention from large-screen manufacturing, dealers said.
The profit reaped from the sale is expected to improve the bottom line of Chunghwa Picture Tubes, which had suffered a net loss for the ninth consecutive quarter as of the third quarter of last year, they added.
Shares of Chunghwa Picture Tubes rose 4.67 percent to NT$1.12 (US$0.04) with 11.84 million shares changing hands, while the benchmark weighted index on the Taiwan Stock Exchange was down 0.3 percent at 7,927.49.
The stock regained momentum soon after the local bourse opened as investors took cues from the asset disposal, and even rose 7 percent, the maximum daily increase, to NT$1.14 before profit-taking set in to limit the upside, the dealers said.
According to a statement released by Chunghwa Picture Tubes a day earlier, the screen supplier sold its Shenzhen plant to CSOT for 446 million Chinese yuan (US$71.70 million).
Chunghwa Picture Tubes said the company is expected to reap about 47 million yuan in profit from the asset disposal after the transaction is completed at the end of the second quarter of this year.
The Taiwanese firm said CSOT, which specializes in large screens for TV use, has built up close business ties with Chunghwa Picture Tubes by serving as one of the Taiwanese firms' major clients.
While Chunghwa Picture Tubes is shifting its production to small- and medium-sized panels to tap the growing mobile device market, it was a good decision for the company to sell the Shenzhen assets, the firm said.
Chunghwa Picture Tubes said that despite the disposal of the Shenzhen facility, the company still operates small and medium-sized screen module plants in China's Fujian and Jiangsu provinces.
Currently, displays used in smartphones and tablet computers account for about 75 percent of Chunghwa Picture Tubes' total consolidated sales.
The dealers said the gains generated from the asset disposal are expected to help Chunghwa Picture Tubes cut losses in 2013, while the market expects that the company will not turn a profit this year.
In the first nine months of last year, Chunghwa Picture Tubes had a net loss of NT$9.74 billion, or NT$1.50 in loss per share, compared with NT$8.64 billion in net loss, or NT$1.33 in loss per share, during the same period of 2011.