Shares of TPK down on concerns over price competition
Central News Agency
2014-09-02 11:53 AM
Taipei, Sept. 2 (CNA) Shares of major touch panel maker TPK Holding Co. came under heavy pressure Tuesday morning as speculation circulated that AU Optronics Corp. and Innolux Corp. have entered a price war for a larger market share, undermining the touch panel maker's bottom line, dealers said. The current selling reflected further long-term worries over escalating competition, they said. TPK orders have been squeezed since AUO and Innolux, the two largest Taiwanese flat panel suppliers, began producing their own touch panels and Chinese rivals expanded production. As of 11:21 a.m., shares of TPK had lost 3.27 percent to NT$192.00 (US$6.42) with 7.58 million shares changing hands. The weighted index on the Taiwan Stock Exchange was down 0.82 percent at 9,435.41 points. "Such negative leads dampened investor sentiment toward TPK at a time when the global touch panel business has witnessed rising competition due to an increase in production capacity," KGI Securities analyst Phil Chu said. The pressure is on for TPK after local media reported Tuesday that AUO and Innolux have priced their on-cell touch panels for notebook computer at 30 percent below TPK's price tags. AUO and Innolux have reportedly seen orders pouring in thanks to the low prices. Based on that speculation, Chu said, it is no surprise that shares of TPK faced selling soon after the local bourse opened. The gloomy sentiment also spread to Wintek Corp., another touch panel maker in Taiwan. Shares of Wintek had fallen 1.48 percent to NT$10.00 on trading volume of 10.15 million shares. As far as AUO and Innolux are concerned, efforts to enter the touch panel business will likely offer a chance to make better use of their flat panel supply while allowing them to hold a big influence over touch panel prices, according to WitsView, the panel market research unit of market information advisory firm TrendForce. "The move to cut touch panel prices prompted investors to think the touch panel industry is facing unfavorable circumstances in a supply glut. Many investors have suspected that AUO and Innolux have no choice but to stage a price competition to win orders," Chu said. "Faced with such a negative situation, TPK as a specialized touch panel supplier could see its bottom line further squeezed," Chu said. TPK has felt the pinch from rising competition in the industry. In the first half of this year, it posted NT$451.72 million in net profit, down sharply from the NT$7.78 billion in net profit recorded over the same period last year. Its earnings per share for the six-month period stood at NT$1.37, compared with NT$23.77 recorded a year earlier. In the second quarter of this year, TPK's gross margin fell to 8.9 percent from the first quarter's 10.0 percent, and its operating margin dropped to 0.3 percent from 1.1 percent. "TPK shares had staged a technical rebound in recent sessions on expectations that its shipments will pick up in the fourth quarter, a traditional peak season for the touch panel business. Now, the gains are being eroded as investors take price cuts as an excuse to take profits," Chu said. However, Chu said TPK shares could see some technical support at around a 20-day moving average of NT$190 in the short term despite the rising competition. (By Frances Huang)
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