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Innolux March sales up 50 percent, firm's shares jump

TAIPEI -- Shares of Innolux Corp. (群創光電), one of Taiwan's leading flat panel makers, moved higher Thursday morning after the company reported a roughly 50 percent month-on-month increase in sales for March, dealers said.

However, the uptrend was limited to some extent as investors locked in gains they had built on expectations of strong sales boosted by rising demand from China ahead of the May 1 Labor Day holiday, the dealers said.

As of yesterday, shares of Innolux had added 0.87 percent to NT$11.6, off an early high of NT$11.95, with 153.32 million shares changing hands. The weighted index on the Taiwan Stock Exchange closed up 17.53 points, or 0.19 percent, at 8,948.10.

“Some investors simply sold Innolux shares to take profit after the flat screen supplier reported sales growth for March. It was no surprise that the gains were limited following a recent strong showing,” MasterLink Securities analyst Tom Tang said.

“The stock opened sharply higher today due to the March sales growth and almost hit NT$12, the nearest technical resistance level, before some profit-taking set in” Tang said.

Tang said the strong growth in March sales reflected solid demand from China ahead of the upcoming Labor Day holiday, a traditional buying season among Chinese consumers, particularly for electronic devices.

In a statement released the previous day, Innolux said it posted NT$37.3 billion in consolidated sales for March, up 50.1 percent from February but down 16 percent from a year earlier.

Innolux Becomes the Largest Local Panel Maker

The March sales helped Innolux replace rival AU Optronics Corp. (AUO, 友達光電), whose March sales reached NT$34.02 billion, to make it the largest flat screen supplier in Taiwan.

Last month, Innolux's large-sized panel shipments rose 39.9 percent from February to 12.50 million units, while its small- and medium-sized screen shipments also grew 30.6 percent month-on-month to 29.97 million units.

Tang said that on the back of the significant sales growth in March, Innolux recorded better-than-expected sales for the first quarter, totaling NT$89.56 billion.

Tang's brokerage had anticipated that first-quarter sales would only hit NT$84.1 billion, but the figure was still down 7.9 percent from a quarter earlier and down 23.3 percent from a year earlier.

In the January-March period, Innolux's large-sized screen shipments fell 3.8 percent from the fourth quarter to 31.47 million units, and its small- and medium-sized panel shipments fell 25.1 percent from a quarter earlier to 77.89 million units.

"Compared with the previous quarter, Innolux still reported lower sales for the first quarter. It is likely that the flat panel maker will report a net loss in the three-month period, extending from that seen in the fourth quarter of last year," Tang said.

In that quarter, Innolux incurred NT$0.15 in loss per share (LPS), compared with NT$0.08 in earnings per share (EPS) recorded in the third quarter. For the entire 2013, the flat panel maker posted NT$0.57 in EPS, compared with NT$4.00 in LPS seen in 2012.

"Concerns over a supply increase remain in place as major Chinese panel makers are gearing up to raise their production. I expect a supply glut will continue to impact Innolux's and AUO's pricing power in the second half of this year," Tang said.

The analyst said Innolux's EPS for 2014 could stand at about NT$0.41.

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