Asian Stk Focus: Telecom Boom Benefits
Taiwan's Picvue
By BAKER LI
TAIPEI -- The rush into Picvue Electronics Ltd. (Q.PIC) shares won't
abate in the year ahead even after a recent rally, said analysts who expect
the Taiwanese display panel maker will continue to benefit from the
explosive growth in the global telecommunications industry.
Picvue has gained more than 30% over the past month as investors,
gripped by the Internet and telecommunications fever, chased the stock
higher.
Internet and telecommunications-related stocks have been surging on
Taiwan's stock markets recently, due to their promising growth prospects.
Led by these stocks, the technology subindex has risen 5% over the past
month.
Picvue is "one of the red-hot telecom-concept plays; we believe the
bullishness in Picvue will last for at least one to two years," said Johnny
Lee, a technology analyst at President Securities Corp.
By the end of next year, Lee forecasts that Picvue will climb to as high as
NT$55 ($1=NT$31.637), more than 70% above Thursday's close of
NT$32.40. The stock hit the year's closing high of NT$33.90 on Dec. 6.
Picvue mainly produces super-twisted nematic liquid crystal displays, or
STN-LCDs, mostly used in mobile phones and personal digital assistants,
or PDAs, which are lightweight, hand-held computers.
STN-LCDs currently account for around 80% of Picvue's sales. Picvue is
the largest STN-LCD maker in Taiwan in terms of production value, and is
the eighth largest STN-LCD maker in the world.
Cell Phone Growth Outlook Bright
In 2000, the global demand for mobile phones will grow to between 350
million units and 400 million units from the 260 million units projected for
this year, and the number will balloon to 700 million in 2002, according to
data from Fubon Securities Corp.
"The market potential (for mobile phones) is very big because more
advanced mobile phones equipped with Internet access will be
introduced," said Phil Lee, a senior technology analyst with Asia Pacific
Securities Investment Trust Co.
The code division multiple access, or CDMA, mobile phone is expected to
replace Global system for mobile communications technology, or GSM, as
the industry standard in coming years, said Asia Pacific's Lee.
Aside from making phone calls, CDMA phones enable users to access the
Internet, make financial transactions, engage in the remote control of
electrical and electronic devices, and transmit video materials.
M.H. Ching, Picvue's vice president and spokesman, is confident that his
company will get more orders from multinational clients next year. "In
2000, demand for PDAs worldwide will likely increase 20% (from last
year), and demand for cellular phones will exceed 300 million units," Ching
said. 3Com Corp. (COMS) and Motorola Inc. (MOT) of the U.S. are
two of the company's largest customers.
With rising demand and production, Picvue expects to ring in NT$5.2
billion to NT$5.3 billion in sales next year, compared with NT$4.17 billion
projected for this year. Next year's earnings forecast has not been
released.
However, President Securities' Lee is more optimistic, saying Picvue will
likely garner sales of NT$5.38 billion next year. Pretax profit for next year
is expected to hit NT$743 million, or NT$1.31 per share, compared to
NT$433 million, or NT$0.8 per share, estimated for this year.
Products For Large Display Screens
To capitalize on rising demand, Picvue is planning to invest NT$2.1 billion
to install a new production line for STN-LCD screens and make upstream
glass substrates for large-sized thin-film transistor LCDs.
Picvue's move into the TFT-LCD glass business is understandable because
the local TFT-LCD industry is expected to boom in coming years, said
analysts.
Taiwan is the world's largest maker of notebook computers, all of which
use large TFT-LCD screens. In addition, lured by falling prices, consumers
who now use traditional glass-tube computer monitors are expected to
switch to the power and space-saving TFT-LCD screens, said analysts.
The promising outlook has lured six Taiwan companies, Chunghwa Picture
Tubes Ltd., Quanta Computer Inc. (Q.QTC), Acer Display Technology
Corp., an affiliate of Acer Group, Unipac Optoelectronics Corp., Hannstar
Display Corp. and Chi Mei Optoelectronics Corp., to invest in the LCD
business.
The domestic production value of TFT-LCDs will amount to NT$239
billion in 2005, accounting for 30% of the global market, according to Sara
Wu, who tracks the LCD industry for Core Pacific Securities Corp.
Picvue said it will buy advanced machinery equipment from a Japanese
LCD maker for the new production line. The Japanese company will
contribute technical expertise. However, Picvue declined to identify the
company or reveal details about financial terms.
The new production line is scheduled to start operating in the fourth quarter
of next year. Picvue now has two production lines for STN-LCDs, with an
estimated combined output of 300,000 units per month.
-By Baker Li; (8862) 2502-2557; baker.li@dowjones.com
-0- 17/12/99 00-16G |
