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AUO shares dive on Q4 tax report, ADR losses

AUO shares dive on Q4 tax report, ADR losses

Taipei, Jan. 30 (CNA) Shares of AU Optronics Corp. (AUO, ??), one of Taiwan's leading flat panel suppliers, came under heavy pressure Friday morning after it reported the previous day a higher than expected tax payment in the fourth quarter of last year. The current selling also reflected a plunge in the company's American depositary receipts (ADRs) on Wall Street overnight amid cautious sentiment in the typically slow first quarter of the year, dealers said. Worry over slow shipments in the January-March period eclipsed AUO's strong results for the entire 2014, which was a good year for the global flat panel market because of solid demand, particularly for large-sized screens, dealers said. As of 11:06 a.m., shares of AUO had fallen 6.23 percent to NT$17.30 (US$0.55), with 151.08 million shares changing hands. The selling also extended to AUO's competitor Innolux Corp. (??), whose share price had dropped 5.0 percent to NT$15.20. The weighted index on the Taiwan Stock Exchange was down 0.17 percent at 9,411.29 points. "AUO's income tax payment in the fourth quarter of last year was about 50 percent higher than the market estimate," Ta Ching Securities analyst Andy Hsu said. "As a result, the company reported a lower-than-expected net profit for that quarter." He said investors who had picked up the stock before the earnings report simply seized the tax figure as a reason to lock in their recent gains soon after the local bourse opened," Hsu said. In the previous two trading sessions, foreign institutional investors bought 31.45 million net worth of AUO shares on the main board. At an investor conference Thursday, AUO reported NT$6.58 billion in net profit for the fourth quarter of 2014, a quarterly drop of 9.9 percent but a year-on-year increase of 1.1 percent. The company said its fourth-quarter earnings per share fell last year to NT$0.62 from NT$0.76 in the third quarter after it paid more than NT$1.3 billion in income tax. In the October-December period, AUO's gross margin rose to 14.8 percent from 14.4 percent in the previous quarter, while its operating margin grew by to 8.4 percent from 8.2 percent in the third quarter. It reported a stronger operating margin than its competitors LG Display (7.50 percent) and Samsung Electronics (6.70 percent.) For the entire 2014, AUO posted NT$18.06 billion in net profit, an annual increase of 342.7 percent and its highest profit in six years. Its EPS was NT$1.83. Hsu said that the company's 2014 earnings largely reflected a recovery in large-sized flat panel demand, in particular for TV screens, which boosted panel prices. "But investors have shifted their attention to the future and are worried about the first quarter of this year, as TV flat panel prices are showing signs of declining," Hsu said. "I think that a 3.04 percent fall in AUO's ADRs in the U.S. market overnight also pointed to such concerns," he said. "Selling in Innolux shares this morning reflected those worries." Hsu forecast that AUO and Innolux will face more pressure in the second half of the year, when their competitors in China and South Korea are expected to boost production capacity. (By Pan Chi-i and Frances Huang)


Updated : 2021-09-28 00:17 GMT+08:00