Asian LCD makers see share prices fall on oversupply fears

05 August 2004 00:55  [Source: ICIS news]

SINGAPORE (CNI)--Asia’s thin-film-transistor liquid-crystal-display (TFT-LCD) makers have seen their share prices fall in recent weeks due to mounting fears of oversupply.

The downward trend has also concerned Asia’s chemicals producers who have invested heavily in the TFT-LCD market’s growth.

As TFT-LCD materials carry higher margins than commodity chemicals, many of Asia’s top chemical companies have staked large investments in materials for the electronics and information technology industries, based in part on assumed high growth rates for LCD materials. Those assumptions have recently been challenged.

DisplaySearch, a major flat panel display (FPD) research and consulting groups said in their latest monthly LCD pricing report that TFT-LCD prices dropped for the first time in 18 months in June and that declines were also expected in July and August.

With the oversupply, major LCD makers have seen their fortunes slide. Japan’s Sharp has seen its share price drop from a high of around Yen2050 ($18.4/Euro15.3) to Yen1583 while Taiwan’s Chi Mei Optoelectronics has seen its share price almost cut in half from its NT$79.50 ($2.35/Euro1.95) high in April to NT$42 as of  Wednesday.

LG-Phillips, a major South Korean producer, last month failed to raise its initial target of $1.4bn-$1.9bn in an initial public offering (IPO) due to oversupply concerns.

Shares of Asian chemical companies that have invested in LCD materials have also been hit, although to a lesser degree and for multiple reasons.

Among them, South Korea’s LG Chem was trading on Wednesday at Won37 100 ($31.80/Euro26.40), off a 52-week high of  Won61 900., while Asahi Glass of Japan was trading at Yen986, off its 52-week high of Yen1271. Asahi Glass’s price peaked in April while LG Chem peaked in late January.

Masami Sawato, analyst for plastics and chemicals with Credit Suisse First Boston in Tokyo, says that the downside of the oversupply situation will be most acutely felt by LCD panel producers, but that chemical producers will also see their margins squeezed.

He says speciality companies - such as Nitto Denko, JSR Corp and Zeon - will be the hardest hit.

By: James Dallmeyer
+65 6780 4359

< previous article(ICIS Podcast: Chemical News Central 2 November 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly