Shares of Wintek rally after news of record sales in March


CNA

TAIPEI — Shares of Taiwan-based touch panel maker Wintek Corp. moved higher yesterday as investors were buoyed by the company’s record high sales in March, dealers said.

They warned that the rally could quickly fizzle, however, because rising competition in the global market has prompted many touch panel makers — including Wintek — to cut prices to win orders, putting pressure on their bottom lines.

At the end of trade, Wintek shares closed up 1.57 percent to NT$22.65. “As sentiment in the broader market has dimmed because of the possibility that the government will impose a capital gains tax on stock investments, many investors have tended to target stocks like Wintek, which have positive leads,” Grand Cathay Securities analyst Mars Hsu said.

Wintek reported Monday consolidated sales of NT$10.49 billion in March, the highest in any single month in the company’s history, boosted by shipments to Apple, which launched its new iPad the same month.

The March figure was up 11.37 percent from February and also up 25.45 percent from a year earlier.

In the first quarter of this year, Wintek had consolidated sales of about NT$28.80 billion, up 11 percent from the previous quarter and up 35.64 percent from the same period in 2011.

“The high trading volume showed investors have strong interest in chasing prices on expectations that its gross margin will rise above zero,” Hsu said.

In the fourth quarter of last year, Wintek reported a gross margin of minus 4.9 percent amid fierce competition that hurt touch panel makers’ pricing power.

During that quarter, Wintek posted a loss per share of NT$1.34, more than offsetting the gains it had posted in the previous quarters. As a result, the company reported a loss per share of NT$1.16 for 2011 as a whole.

Hsu said he was not that optimistic about Wintek’s profitability despite the growth in sales in the first quarter.

“Wintek has cut its product prices a lot in the past quarter in a bid to secure orders from Apple and maintain its capacity utilization rate in the 70 to 80 percent range,” Hsu said.

“I don’t think the robust sales will be translated into profit for Wintek in the first quarter,” Hsu said. “My brokerage estimates its gross margin will end up at a negative 2 percent in the January-March period.”

Hsu said he expected the gains in Wintek’s share price to be short-lived and cautioned investors to be ready for a quick pullback.