AU Optronics to Reduce Capital
Following moves by a number of Taiwanese companies, AU Optronics (2409.TT) indicated that it will be reducing capital by NT$28.82b ($1.001b US) through a cash dividend of NT$1 ($0.03 US) and the cancellation of ~20% of the company’s 9.6b shares this year. The company also indicated that it expected to return to shareholders a total of NT$55.77b (~$1.937b US) over the years 2022 through 2024, of which NT$26.95b (~$936.28m US) would remain in 2023 & 2024. AUO reported its best year in 14 years in 2021 and has already announced plans to build a new Gen 8.5 LCD fab in Taichung which is expected to begin production in 2025, (we expect it might be a bit earlier) and which will see its 2022 capex increase from NT$17b (~$590.6m US) last year to NT$45b (~$1.56b US) this year, with a total cost (including other fab upgrades) of between NT$100b (~$3.47b US) and NT$150b (~$5.21b US). The capital reduction will be voted on at the June shareholder meeting.
AUO’s Taiwan shares declined by 1.96% last night with investors seemingly disappointed at the dividend value, although the total payout represents 46.5% of the 2021 full year EPS. It has been a tough 12 months for AUO’s stock price, peaking at NT$33.35[1] on April 28, 2021 and falling to a low of NT$16.80 on October 4, 2021, despite strong results, as investors have remained concerned about the volatility seen in LCD panel prices. AUO has and continues to push a transition away from generic LCD panel production toward premium and specialty panels, which represented ~ 50% of revenue in 4Q ’21 and should lower the company’s sensitivity to typical display industry cyclicality.
[1] Closing Price
AUO’s Taiwan shares declined by 1.96% last night with investors seemingly disappointed at the dividend value, although the total payout represents 46.5% of the 2021 full year EPS. It has been a tough 12 months for AUO’s stock price, peaking at NT$33.35[1] on April 28, 2021 and falling to a low of NT$16.80 on October 4, 2021, despite strong results, as investors have remained concerned about the volatility seen in LCD panel prices. AUO has and continues to push a transition away from generic LCD panel production toward premium and specialty panels, which represented ~ 50% of revenue in 4Q ’21 and should lower the company’s sensitivity to typical display industry cyclicality.
[1] Closing Price
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