A Research on the Risk of TFT-LCD Industry on the Basis of Cash Flows

• Main Authors: Pei-hua Lin, 林佩樺
• Other Authors: none
• Format: Others
• Language: zh-TW
• Published: 2005
• Online Access: http://ndltd.ncl.edu.tw/handle/18034159915432082765

碩士 === 國立中山大學 === 財務管理學系研究所 === 93 === The main purpose of this research is to discuss the risk of TFT-LCD industry, and to prove that the future of this industry is not positive as expectation. Through discussing the TFT-LCD firms’ operating, investing, and financing activities and observing the cash flows of their parent companies, the research tries to find the potential risk of this industry. The following conclusions were obtained. 1. From “the variability of stock prices” and “beta” of domestic TFT-LCD firms, we cannot find out if the operating risk of TFT-LCD industry rises or not. 2. The gap between cash flows from investing activities and cash flows from operating activities is getting larger. On the one hand, TFT-LCD firms have to keep on investing to compete with others, which makes their cash outflows grow up rapidly. On the other hand, Korean TFT-LCD firms and international system enterprises try hard to cut down panel prices, which makes domestic TFT-LCD firms can only earn low profit and even get loss. 3. Nowadays people put emphasis on the growth opportunity of LCD TV and expect the demand of LCD TV will bring TFT-LCD firms high profits. However, the research finds that the investment and production of LCD TV lack efficiency, which implies even if the demand of LCD TV spring up in the future, it won’t necessarily benefit domestic TFT-LCD firms. 4. Observing the trend of Economic Value Added(EVA) of domestic TFT-LCD firms, we can see that EVA is getting lower during each valley of Crystal Cycle, which reflects the over production is getting worse in this industry and large investment accelerates the loss of TFT-LCD firms. 5. The difficulties of financing activities of domestic TFT-LCD firms include: (1) acceleration of Crystal Cycle, (2) shortage of cash flows limits the financing ability, (3) information asymmetry lowers the willingness of investors to invest, (4) banks starting to tighten the loans to TFT-LCD firms due to risk consideration. 6. The parent companies of TFT-LCD firms invest in TFT-LCD industry in order to cut down the cost and keep earning profits, however, the huge cash outflows raise the risk of the parent companies instead. It indirectly proves the high investment risk of TFT-LCD industry.