AU shares hit near 2-wk high after new LCD investments
TAIPEI, Aug 28 (Reuters) - Shares of Taiwan's AU Optronics Corp (2409.TW), the world's third-largest LCD maker, jumped more than 2 percent to near a two-week high on Thursday, after it announced a long-term investment plan to build new factories. AU's shares rose 2.2 percent by midday, defying the broader electronics sector's .TELI 0.6 percent fall and the main TAIEX's 0.4 percent drop. Shares of smaller local rival Chi Mei Optoelectronics Corp (3009.TW) also rose 1.3 percent.
AU Optronics (AUO.N), which compete with larger Korean rivals Samsung Electronics (005930.KS) and LG Display (034220.KS), said on Wednesday it will invest about T$400 billion ($12.7 billion) to build four new LCD plants in Taiwan over the next decade, looking beyond a current industry downturn.
As part of a long-term commitment to investing in Taiwan, AU will build a first LCD factory to use more advanced technology, with operations starting in 2011-12. [ID:nTP46645]
In the short term, however, worries linger over the impact from a slowing global economy on demand for new computers and flat-screen televisions that require liquid crystal displays.
"Although we believe the market has largely priced in the decline in IT panel prices, sector earnings could remain under pressure as TV panel prices decline sharply in Q4 2008," UBS Securities wrote in a recent note.
UBS put a "sell" rating on AU in the short term, but it had a 12-month "buy" rating on AU, saying that the stock is trading at one times its price-to-book ratio, a five-year valuation trough.
Despite the day's rise, AU's Taipei-listed shares were down 37 percent so far this year, more than double the fall on the big board. (US$1=T$31.5) (Reporting by Baker Li, Editing by Ken Wills)
