Asahi Glass’ earning announcement
Asahi Glass just released its Q3 earning results yesterday. It is always difficult to judge if the performance was strong because Japanese companies do not give guidance for Q1 and Q3. However what the company has announced an upward revision to FY12/09 full year guidance, which implies Q4 sales of JPY328bn. The new Q4 sales expectations are not that impressive, which implies a strong performance in Q3.
In the details, the upward revision comes from 3 distinct factors:
- Better than expected shipment of FDP glass
- Stronger auto glass shipment
- Higher prices in Europe due to strong demand of automobile, TV and computers.
On the other hand, the chemical department came up short of expectation and was the only disappointment of the quarter.
Other than the rebound of the glass sector in the last quarter the real positive for Asahi Glass (AGC) is its own numbers. AGC is expecting 15% area growth in the coming quarter, which is higher than its peers (Corning = 2-3% and Nippon Electric Glass = 10%). I can assume from those numbers that AGC has gained and will gain market shares, which is strongly positive for the company and the stock price.
The main contributor to AGC’s strong growth is the opening of Sharp’s start up Sakai since AGC supplies 40% of Sakai’s glass. Recently Sharp has released its Q3 results and announced that panel area growth will be up 70% QoQ, which comforts me in saying that Asahi Glass will enjoy a strong Q4.
Of course, AGC is a cyclical company and given the strong pull back of the world financial market it is quite possible the stock will underperform the market. However, I will use this opportunity to add more weigh in the stock as I strongly believe Flat Panel related stocks will enjoy strong revenue growth over the next few quarters.