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AU Optronics shares see boost on 20-percent increase in March sales

TAIPEI -- Shares of AU Optronics Corp. (AUO) moved higher yesterday morning after the Taiwanese flat panel maker reported a 20-percent month-on-month increase in sales for March, dealers said.

The sales growth reflected rising demand from China ahead of the May 1 Labor Day holiday and investors were hoping that the company's sales in April can continue to grow with the help of strong purchases from Chinese buyers, they said.

As of 11:07 a.m., shares of AUO had added 3.45 percent to NT$12.00 (US$0.4), with 81.36 million shares changing hands. The weighted index was up 0.41 percent at 8,924.30.

“The current buying came from optimism over AUO's shipment outlook as China's May 1 Labor Day holiday is approaching,” KGI Securities analyst Phil Chu said. “The March sales data was simply evidence of the shipment increase.”

In a statement released Tuesday, AUO announced consolidated sales of NT$34.02 billion in March, up 20.7 percent from a month earlier, but down 10.3 percent from a year earlier.

In the first quarter, AUO's consolidated sales totaled NT$93.80 billion, down 8.7 percent from the fourth quarter on slow season effects, and down 0.47 percent from the first quarter of 2013.

“The pick-up in March sales limited the impact of typical first slow season effects in the first quarter. Otherwise, sales for the quarter would have fallen more sharply on a quarterly basis,” Chu said.

Chu said AUO has benefited from a recovery in demand for large-sized panels, in particular TV screens in China. TV panels account for more than 40 percent of the company's total revenue.

AUO figures backed up Chu's estimate. The company's shipments of large screens for TV, desktop computer and notebook computer use in March rose 11.1 percent from a month earlier to 10.21 million units, while shipments of small and medium-sized screens grew 44.8 percent month-on-month to 12.64 million units.

In the first three months of the year, AUO shipped 29.18 million large-sized screens, down 3.3 percent from a quarter earlier, but up 8.3 percent from a year earlier. Small and medium-sized screen shipments in the three-month period totaled 33.46 million units, down 18.7 percent from the fourth quarter and but up 9.1 percent year-on-year.

“With buying from China on the rise, I expect AUO will report a month-on-month increase in sales in April of about 10 percent,” Chu said.

Innolux Corp. has yet to release its March sales data, but Chu said Innolux could report an uptrend similar to that seen at AUO. As of 11:07 a.m., shares of Innolux had gained 2.22 percent to NT$11.50.

Chu said AUO shares were getting a boost from foreign institutional buying as foreign investors have turned upbeat about AUO's sales and its lead in ultra-high definition panels for TV production.

According to Chu, foreign institutional investors have been net buyers of about 200 million AUO shares in the past 10 trading sessions.

Among the upbeat foreign brokerages, Barclays has issued an “overweight” recommendation on AUO shares and has given a target price of NT$13 for the stock, while Credit Suisse has maintained an “outperform” rating and a NT$13.5 target price for AUO shares.

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