PREVIEW-LG.Philips, Taiwan LCD makers to enjoy strong Q4
* What: Q4 earnings from South Korea's LG.Philips LCD and Taiwan LCD makers AU and Chi Mei
* When: LG.Philips (Monday); AU and Chi Mei (Jan 30-31)
* Strong demand and stable prices boost earnings
By Rhee So-eui
SEOUL, Jan 10 (Reuters) - Flat screen maker LG.Philips LCD Co Ltd (034220.KS) and two smaller Taiwan rivals should report strong quarterly earnings growth as demand for thin TV screens kept prices firm in a traditionally sluggish fourth quarter.
Makers of liquid crystal display (LCD) panels are set to enjoy a booming flat-screen TV market and tight supplies in 2008, after a strong 2007 earnings rebound as companies invested less.
China will lead global LCD TV market growth, as consumers with increased buying power replace old, bulky tubes to view this summer's Beijing Olympic Games.
"Prices stood firm in the fourth quarter, although they turned a bit lower towards the year-end," said Daewoo Securities analyst Jason Kang. "2008 will be the best year ever."
LG.Philips (LPL.N), the second-biggest maker of large-sized LCDs, is forecast to report on Monday 665.6 billion won ($710 million) in October-December net profit, according to a Reuters poll of 10 analysts.
The forecast, which would be the company's best profit since the second quarter of 2004, marks a rebound from a 174.3 billion won loss a year earlier, when prices sagged on weak computer and TV sales.
LG.Philips, which competes with leader Samsung Electronics (005930.KS) and Taiwan's AU Optronics Corp (2409.TW), earned 524.2 billion won in the July-September third quarter.
Sales are forecast to rise by more than a third to 4.12 trillion won from a year ago. The average panel price at LG.Philips was likely steady in the fourth quarter, after rising 7 percent in the third.
AU (AUO.N), the world's No.3 LCD maker, should post October-December net profit of T$22.56 billion, sharply higher than T$1.66 billion earned a year ago, according to Reuters Estimates. AU is due to report its results on Jan. 30.
Quarterly net profit at its smaller local rival Chi Mei Optoelectronics Corp (3009.TW), due on Jan. 31, is seen rocketing to T$15.06 billion from just T$436 million a year ago.
STRONG YEAR AHEAD
LCD makers in 2008 will likely see only moderate price erosion this quarter and then enjoy a strong year, analysts said. Scheduled new production lines will affect the market only in 2009 at the earliest, they added.
"Except in the first quarter, panel supply will be tight throughout the year," said Jay Yoo, analyst at Korea Investment & Securities. "They should wait until 2009 to see some capacity expansion."
As LCD TVs grow in popularity, TV makers have been setting ambitious sales goals, but securing sufficient screens may prove difficult.
Panasonic brand maker Matsushita Electric Industrial Co Ltd (6752.T) said it may miss its annual TV sales target, highlighting tight supplies. LG Electronics Inc (066570.KS), which jointly owns LG.Philips with Philips NV (PHG.AS), said this week it planned to double its LCD TV sales this year.
LG.Philips is expected to nearly double its net profit this year to 2.19 trillion won, according to Reuters Estimates.
Shares in LG.Philips, valued at $17.6 billion, rose 13 percent in October-December, outperforming a 2.5 percent fall on the wider share market . ($1=937.2 Won) (Additional reporting by Baker Li in TAIWAN; Editing by Keiron Henderson & Jan Dahinten)
