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LCD Sales Growth Continues for AU Optronics

Post Time:Jul 10,2009Classify:Company NewsView:346

On July 7, Taiwanese LCD panel maker AU Optronics AUO reported June monthly sales figures that exceeded our expectations. Revenue was $919 million in the month, up about 10% from the company's May sales total of $838 million. The firm's June results represent a sequential increase for the sixth straight month and a significant increase from the firm's likely "rock-bottom" sales levels of about $400 million in January.

The company did not see an increase in LCD panel shipments in the month of June. Rather, the firm was a beneficiary of tight glass supply in the supply chain, which allowed AU Optronics to raise prices on its panels during the period. The company also saw continued tail winds related to China's stimulus package, where the country provided $2.9 billion in subsidies for rural residents to buy consumer electronics. A recent article from the Taiwan News indicates that AU Optronics expects further sales growth in the third quarter; we believe this growth is a function of seasonality, as AU Optronics' third quarter has traditionally been strong in the summer months because of back-to-school season.

Although we are optimistic about the company's recent sales figures, we remain cautious whether the firm's recent results signal a path toward a full and sustainable recovery. As an example, June revenue of $919 million still represents a 17% decline from the year-ago month. We are increasing our fair value estimate for AU Optronics, as the company's recent sales results have exceeded our expectations, but we are hesitant to declare that the company is out of the woods just yet.

Source: http://www.morningstar.caAuthor: shangyi

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