AUO...flat panel sales to new heights (AUO, rated BUY)
Au Optronics Corp. ( AUO ) is the third largest flat-panel manufacturer in the world, but has recently surpassed its competitors to become the global leader in actual number of shipments. The Taiwan-based company has a simple motto: Be a Global Leader in Flat-Panel Displays. AUO isn't seeing a slowdown in the United States either. "We've seen the subprime market woes, but so far, we've not seen a big slowdown in demand from customers," President L.J. Chen told an investor conference. The company expects first quarter shipments to fall 10% from the previous quarter but most of that is a seasonal slowdown. "2008 will be better than 2007 and we believe demand in China will emerge significantly from the second quarter before the Olympics in the summer," said Chen. Some analysts expect supply shortages this year. AUO is expanding capital expenditures this year to a range of between NT$130 billion and NT $140 billion versus only NT$65 billion in 2007. Part of the capital-expenditure budget will be used for an additional 8.5-generation production line at its plant in Taichung, which hasn't started production. The 8.5 plant produces panels larger than 50 inches. For a company in a hot industry, AUO is cheap. It has a P/E of 5.36 and a P/B of 1.66.