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May 26, 2017

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AUO shares up as firm remains profitable in first quarter

TAIPEI -- Shares of AUO Optronics Corp. (AUO, 友達光電) closed sharply higher Friday after the flat panel maker continued to report a net profit for the first quarter, dealers said.

In an investor conference, AUO said it posted NT$166 million in net profit, or NT$0.03 in earnings per share in the first quarter, compared with NT$1.08 billion in net profit, or NT$0.10 per share recorded in the fourth quarter of last year. The drop in net profit resulted from the slow-season impact.

4th Consecutive Quarter of Profitability

It was the fourth consecutive quarter in which AUO had stayed profitable.

In the quarter, AUO shipped 29.18 million large-sized screens, down 3.3 percent from the fourth quarter, while shipments of small- and medium-sized panels fell 18.7 percent from a quarter earlier to 33.46 million units.

However, the first-quarter earnings beat market expectations. Among the downbeat brokerages, Citigroup had previously anticipated that AUO would incur a net loss of NT$0.1 per share for the quarter.

Before the results were announced two days earlier, many investors had feared that AUO would report a net loss due to the slow-season effect in the January-March period and amid concerns over weakening pricing power, the dealers said.

The buying also reflected AUO's optimism, which indicated a product price rebound in the second quarter on the back of a recovery in global demand, in particular from a buying spree over the May 1 Labor Day holiday in China, they said.

Panel Sector Bottoms Out: Peng

Paul Peng (彭雙浪), AUO's president, told investors that the first quarter was the bottom of the curve for AUO and that he expects the flat panel sector will report an improvement in earnings quarter-by-quarter for the rest of this year.

Peng said his company is upbeat about demand for smartphone panels amid the ongoing wave of phone replacements to meet demand for 4G telecom services.

The executive said demand for ultra-high definition TV panels is also expected to rise, which could further strengthen AUO's bottom line.

Shares of AUO rose 2.63 percent to end at NT$11.70 (US$0.39) with 81.96 million shares changing hands, while the weighted index on the Taiwan Stock Exchange ended up 0.86 percent at 8,867.32 points.

The stock opened sharply higher and momentum continued into the end of the trading session in the wake of the first quarter's results released Wednesday. The local market was closed Thursday for a public holiday.

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