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May 30, 2017

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Innolux aims to raise NT$10 bil. in cash

TAIPEI, Taiwan -- The government approved on Tuesday Innolux Corp.'s (群創光電) plan to raise NT$10 billion in cash in working capital and loan payments, according to the panel maker.

Innoulux Corp. is a subsidiary of Hon Hai Precision Industry and currently the world's third-largest LCD panel manufacturer.

Innolux said in a statement that the Financial Supervisory Commission (FSC) green-lit its proposal to raise NT$10 billion, which would boost the firm's paid-in capital by 10.98 percent to NT$101.09 billion. The capital increase plan will finish in the first half of this year.

Innolux Chairman Tuan Hsing-Chien (段行健) earlier said in the company's earnings presentation with investors that Innolux planned to raise another NT$10 billion by the end of 2014.

But analysts have expressed concerns over whether Innolux can successfully raise NT$20 billion to meet debtor banks' requirements and secure better loan terms.

The fundraising will remain a debt overhang, despite the average selling price potentially improving on more 4K2K ultra-high-definition panels and a cyclical rebound in the second quarter and third quarter of 2014, according to Credit Suisse Securities.

Caused by a decline in TV panel prices and lower factory utilization, Innolux's last-quarter loss followed three consecutive quarters of profitable business. However, Innolux, along with AU Optronics (AUO,友達光電), will pick up in March due to rising demand during China's May 1 Labor Day holiday, dealers said.

"It seems that the global flat screen business has benefited from efforts in inventory adjustments over recent months," Hua Nan Securities analyst Kevin Su told the Central News Agency (CNA).

Many investors have high hopes that the industry will see shipments rising in the coming months, according to Su.

"With China's Labor Day coming on May 1, shipments for March are expected to start to see a breakthrough," Su said.

WitsView also said large-sized screen shipments are expected to grow 8 percent month-on-month in March after February's sequential decline of 4 percent.

Shares of AUO and Innolux moved higher Tuesday morning. Buying momentum in AUO shares continued from a session earlier after Barclays Capital issued an "overweight" recommendation on the stock, while recent strong foreign institutional buying provided another boost, dealers said.

At the end of yesterday's session, shares of AUO dropped 1.41 percent to NT$10.5 with 137.62 million shares changing hands. Shares of Innolux lost 0.95 percent to NT$10.45 on trading volume of 49.07 million shares.

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