Parts Makers for LCD Screens
Earn Big Share Gains in Sector
To find companies that are profiting from the zooming popularity of flat-panel displays, try looking not at the companies that make the panels, but at their suppliers.
Thin-film transistor liquid-crystal displays, or TFT LCDs, have really taken off only in the past year or so, growing 46% to become a $17 billion market. And yet, competition already has grown so fierce that few companies are actually making money from the booming sales.
New production capacity is creating massive oversupply that many investors think will keep margins under pressure for years. Even with surging demand, dedicated TFT LCD makers in Taiwan such as AU Optronics and Chi Mei Optoelectronics are struggling to make it into the black; at Monday's settlement in Taipei, shares of all major Taiwan flat-panel-screen makers declined more than 6% from Friday.
But a handful of companies that make the chips and other components for the TFT LCD panels used in ultraslim computer monitors and television sets are seeing not only rapid sales growth, but also healthy earnings.
Two of the most interesting are Novatek Microelectronics and Optimax Technology. Novatek designs integrated-circuit driver chips that control pixel color and power in TFT LCD displays. Optimax makes polarizers, components that control the vibration of light rays. Both Taiwan companies have seen their share prices soar in recent months, outpacing even the robust rally in the broader Taiwan market since late April.
Shares in Novatek, which were listed on Taiwan's main stock exchange last September, have risen 50% since their all-time low in early February, and have gained 23% since early May. Optimax shares, which listed in late October, have jumped about 50% since early May, and 60% since their all-time low in early March. Foreign investors now own 25% of Optimax, compared with only about 2.5% right after the company listed.
Given the recent steep ascent, some analysts think the shares could soon stall. Novatek's shares slipped 4.4% Monday to NT$76 (US$2.20), or about 15.6 times 2003 earnings based on ING Financial Markets' estimate. Optimax edged up 0.5%, to NT$60, about 14.8 times earnings this year based on a recent UBS estimate. Both stocks are close to or beyond some of the more bullish analysts' price targets. ING, for example, has a 12-month target price of NT$88 for Novatek, and UBS has a target price for Optimax of NT$53.
In a report a month ago, when Novatek's shares were trading at NT$67, UBS argued that expectations of the company's growth were already priced into the stock. Optimax also has drawn scrutiny from some investors for a planned convertible bond offering that they say could result in excessive dilution of outside investors' holdings. But some analysts and investors say the shares still have some room to rise, not least because retail investors, who account for the vast bulk of trading volume in Taiwan, only recently have begun to join the tech-driven market rally in force.
Longer-term investors could find value in any dips in the stocks. "I think there might be a slight pullback, but these stocks should outperform the rest of the market," says Nicholas Teo, an analyst for ING in Taipei. "These are stocks we would recommend to long-term investors."
For the makers of displays, "even though demand in recent months still keeps increasing, we still have some worries of the oversupply situation in the second half," says Victor Shih, chief investment officer at Prudential Investment Trust in Taipei, who is bullish on both Novatek and Optimax. But for suppliers, "if total capacity keeps increasing, then demand for the components will also keep rising."
To a degree, all TFT LCD companies are benefiting from the growth in demand. Panel makers have been helped by strong demand this year that has driven prices up from their unprofitable levels of late 2002. But that could reverse because of intense competition and mounting inventory.
But Novatek and Optimax face less-intense competition and financial burdens than their panel-producing customers, who are racing to build advanced new factories that cost $1 billion to $2 billion each. The component companies also are benefiting from a shift in the production of TFT LCDs to Taiwan and South Korea from Japan. The world's biggest producers are now Samsung Electronics of Korea; LG.Philips LCD, a joint venture between European electronics group Philips and South Korean LG Electronics; and Taiwan's six producers, led by AU Optronics and Chi Mei, which collectively rival the Korean companies' total market share.
Because Taiwan companies want to source their components locally to cut costs, Novatek and Optimax have been able to grab market share from their Japanese competitors, such as polarizer maker Nitto Denko. As a result, Optimax is expecting revenue growth of 33% this year, and expects operating-profit margins to stay steady at about 21%, compared with 20% in the fourth quarter of 2002, says Scott Chuang, an Optimax finance executive.
Novatek also is looking at strong growth, in part fueled by a technological edge over even its more-experienced rivals in Japan. David Chen, a Novatek spokesman, says the company expects its global market share to grow to as much as 15% this year, from about 10% last year.
平板显示器部件供应商异军突起
究竟有哪些公司会在平板显示器的快速普及中获利呢？不要去盯著那些平板显示器的制造商，看看这些制造商的零部件供应商。
薄膜晶体管液晶显示器(TFT LCD)市场不过是在过去1年左右时间才真正出现起色，市场规模扩张了46%，达到170亿美元。但竞争已日趋激烈，因此，尽管销售额出现大幅增长，但很少有公司能真正赚到钱。
产能的增加造成供应严重过剩，在许多投资者看来，这将在数年时间中给制造商的利润率带来压力。即使需求出现上升，像友达光电(AU Optronics)和奇美电子股份有限公司(Chi Mei Optoelectronics Corp., Q.COP)这种专门制造TFT LCD的台湾制造商仍难以赢利；周一台北股市收盘时，所有主要台湾平板显示器制造商的股票较上周五收盘价下跌了6%以上。
但是许多为用于超薄电脑显示器和电视机的TFT LCD面板制造晶片和其他零部件的公司不仅实现了收入的快速上升，收益也出现健康增长。
两家最引人注目的公司是联咏科技股份有限公司(Novatek Microelectronics Corp. Ltd., Q.NVT)和力特光电股份有限公司(Optimax Technology)。联咏科技所设计的集成电路驱动器晶片被用于控制像素色彩和TFT LCD显示器电源；力特光电制造偏光板以及控制光线振动的零部件。这两家台湾公司的股价在近几个月中大幅上涨，即使在台湾股市自4月底以来大幅上涨后，上述两只股票的表现仍强于大盘。
联咏科技去年9月份在台湾主板上市，自2月初创下历史最低点以来，该股已上涨了50%，从5月初至今也已上涨了23%。力特光电于去年10月底上市，该股自5月初以来已上涨了大约50%，较3月初创下的历史低点上涨了60%。外国投资者目前拥有力特光电约25%的股份，而公司上市时外国投资者的持股比例仅为大约2.5%。
考虑到近期股价的大幅上涨，一些分析师认为，这些股票的涨势不久就会停止。
周一，联咏科技的股价下跌了4.4%，至新台币76元（合2.20美元），基于ING Financial Markets对该公司2003年的每股收益预期，其本益比约为15.6倍；力特光电小幅上涨0.5%，至新台币60元，基于瑞士银行(UBS)近期对该公司今年收益的预期，其本益比大约为14.8倍。这两只股票都接近甚至超过了一些较为乐观的分析师设定的目标价位。例如，ING将联咏科技12个月的目标价位定为新台币88元，瑞士银行将力特光电的目标价位定为53元。
1个月前当联咏科技的股价为新台币67元时，瑞士银行在一个报告中称，对该公司增长率的预期已经反映在股价之中。力特光电还招致一些投资者的批评，因为该公司计划发行可转换债券，这些投资者认为此举将稀释外部股东的权益。但是一些分析师和投资者说，这两只股票仍有上涨空间，相当重要的原因是，散户投资者占台湾股市成交量的绝大部分，他们只是在近期才开始大规模介入这轮由科技股带动的上涨行情。
长线投资者可以逢低吸纳这些股票。ING驻台北的分析师Nicholas Teo认为，这些股票可能会小幅回落，但走势应该强于其他类股。该公司愿意向长线投资者推荐这类股票。
Prudential Investment Trust驻台北的首席投资长Victor Shih说，对那些显示器制造商来说，尽管近几月需求继续保持增长势头，但仍需担忧下半年供应过剩的形势。然而，对供应商来说，如果总产能继续增长，那么对零部件的需求也将保持增长。他看好联咏科技和力特光电。
在一定程度上，所有的TFT LCD公司都将受益于需求的增长。今年面板制造商一直受到强劲需求的支持，需求推动价格上涨，而2002年底面板还在赔本销售。但随著竞争的加剧和库存的增长，这种价格上涨势头可能会逆转。
但与面板制造商客户相比，联咏科技和力特光电面临的竞争较少，财务负担也较轻，那些客户眼下竞相建造新工厂，而每个新工厂造价约10亿至20亿美元。
联咏科技和力特光电等零部件公司还将因为TFT LCD的制造由日本转至台湾和韩国而受益。目前，全球最大的TFT LCD制造商分别是韩国的三星电子(Samsung Electronics)、欧洲电子集团荷兰飞利浦电子集团(Philips)和韩国LG电子(LG Electronics)的合资公司LG.Philips LCD，以及以友达光电和奇美电子为首的6家台湾制造商。台湾这6家制造商的总体市场占有率堪与韩国公司相匹敌。
由于这些台湾制造商希望将零部件业务外包给当地公司以降低成本，联咏科技和力特光电得以从偏光板制造商日东电工(Nitto Denko)等日本竞争者手中夺取市场占有率。力特光电的财务总监庄盛荣(Scott Chuang)说，这样一来，预计公司今年的收入增长率将达到33%，预计营运利润率将保持在大约21%，高于2002年第四季度的20%。
联咏科技也预计业务将强劲增长，部分原因在于该公司拥有比经验丰富的日本对手更尖端的技术。联咏科技发言人陈健兴(David Chen)说，预计公司今年在全球市场的占有率将最多增长至15%，去年为大约10%。
