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September 24, 2017

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Shares of Hon Hai's LED arm soar on TWSE debut

TAIPEI--Shares of Advanced Optoelectronic Technology Inc. (AOT, 榮創能源科技), an LED chip manufacturing arm of Hon Hai Group (鴻海集團), jumped Wednesday, the first day of the stock's debut on the Taiwan Stock Exchange.

Strong buying in AOT shares reflected optimism toward its earnings prospects as its major shareholders, including Hon Hai Group, have become one of the major buyers of the LED chip subsidiary, the dealers said.

Shares of AOT rose 26.53 percent from the issue price of NT$72 (US$2.41) to close at NT$91.10, with 14.39 million shares changing hands on the Taiwan Stock Exchange. The benchmark index on the main board ended down 0.43 percent at 9,489.98 points.

As a newly listed stock on the local bourse, AOT shares were not confined to the usual 7 percent daily upward or downward fluctuation limit.

The stock attracted solid interest soon after the local bourse opened as investors left behind the weakness of the broader market, which was impacted by a more-than 100 point plunge on the Dow Jones Average Industrial overnight, the dealers said.

Major Shareholders to Place Orders

Momentum of AOT shares continued until the end of the session amid hopes that the company will see its bottom line further strengthened on the back of orders placed by its major shareholders, they said.

In addition, as AOT is now producing LED products for automotive use to diversify its product portfolio and benefit from rising demand for LED backlights, the market has widely expected that the company will have a better second half of this year compared to the first half, they added.

Hon Hai Group currently holds an approximately 30 percent stake in AOT, while Japan-based LED giant Nichia Corp. owns some 10 percent.

For the listing, AOT issued 15.34 million new shares to raise about NT$1.10 billion in funds and plans to use the proceeds as working capital for future expansion and to strengthen its financial condition.

In its prospectus, AOT said it is possible that its debt-to-asset ratio could fall to 39.03 percent in the third quarter of this year after the listing from 48.79 percent recorded in the fourth quarter of last year.

In 2013, AOT posted NT$687 million in net profit, or NT$5.29 per share, compared with NT$451 million in net profit, or NT$3.47 per share recorded in 2012. In the first quarter of this year, its earnings per share stood at NT$1.09, the highest quarter level in the company's history.

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