AU fundraising spurs share rally, seen signaling demand for panels
By Faith Hung
TAIPEI (Reuters) - AU Optronics' plans to raise as much as $350 million in an overseas share issue sparked a surge in its shares, signaling that strong demand for high-definition displays in tablets and TVs is breathing new life into the loss-making panel maker's fortunes.
Shares in the Taiwanese company, which supplies screens for Apple Inc's iPad mini, surged their 7 percent daily limit for a second day in a row on Tuesday after it announced plans to sell 640 million to 800 million shares as American depositary receipts (ADRs).
"It's urgent and necessary for AU to raise the funds to upgrade its technology," said Oscar Chung, a fund manager at Capital Securities Investment Trust in Taipei, pointing to rising demand for high-definition panels.
"This year will be the first in a few years that sees the industry's gap between demand and supply narrowing," said Chung, who manages $372 million and has been accumulating AU shares this month.
The company did not put a figure on how much it aimed to raise or how the money would be used, saying only that proceeds from the sale will be used for raw material purchases. At AU's latest share price, the issue could raise up to $350 million.
The company earlier this month posted a net loss for a second year in a row in 2012 as panel oversupply weighed on the industry.
The loss forced it to forgo a dividend payment, which it announced along with the rights issue late on Monday. It also said it would cut its capital expenditure budget by T$8.6 billion ($290 million). Continued...