Nippon Electric Glass Dives as Demand Concern Lingers

Sept. 10 (Bloomberg) -- Nippon Electric Glass Co., the world's third-biggest maker of glass for flat-panel televisions, tumbled to a three-year low in Tokyo trading on speculation demand will decline.

Nippon Electric Glass fell 12 percent to close at 1,105 yen on the Tokyo Stock Exchange, the lowest since July 2005. The stock's trading volume was more than three times the 12-month average, and it had the biggest decline on the MSCI World Index.

The company's shares fell 14 percent on Sept. 4 after Corning Inc., the world's largest display-glass maker, lowered its third-quarter profit target by 12 percent, citing an industrywide inventory buildup. Taiwan-based Chi Mei Optoelectronics Corp. said today it will continue reducing panel output next month, joining LG Display Co., the world's second- largest maker of liquid crystal displays.

``Corning's forecast still seems to keep rattling investors,'' said Hiroyuki Okaseri, a Tokyo-based analyst for Mitsubishi UFJ Securities Co., who has an ``outperform'' rating on the stock. ``It seems to me those who have held the shares are dumping them now.''

Shares in Nippon Electric Glass traded at 10 times earnings, the lowest in at least a year. The company, based in Ohtsu, central Japan, expects net income to rise at least 18 percent in the year to March 31, saying improved productivity will offset falling prices and increasing fuel costs.

``Given ongoing inventory adjustments among panel makers, we can't avoid an impact on sales and prices for our products in the July-September period,'' said Nippon Electric Glass spokesman Takashi Chisaka. ``We've got to be more conservative now than we were at the beginning of this quarter.''

`Relatively Volatile'

The stock price has almost halved since June 5, when the shares climbed to this year's high of 2,160 yen. The benchmark Topix index has fallen 16 percent in the same period.

``The stock is relatively volatile compared with peers, a trait that invites involvement by short-term investors,'' said Yoku Ihara, head of equity research at Retela Crea Securities Co. ``It provides a good opportunity for short-selling.''