The Chinese electronic firm BOE Technology Group Co Ltd yesterday announced it was buying 26.36 per cent of the Hong Kong-based computer monitor maker TPV Technology Ltd for HK$1.05 billion (US$127 million), making it the biggest shareholder.

Shenzhen-listed BOE Technology said in a statement that it would buy 356,033,783 ordinary shares or 26.36 per cent of TPV Technology at HK$2.95 (38 US cents) per share from Fields Pacific Ltd, which is currently the Hong Kong firm's biggest shareholder.

The Beijing-based electronic giant, formerly known as the Beijing Orient Electronics Group Co, will pay for the stake with its own capital and bank loans.

Chen Yanshun, senior vice-president of BOE Technology, said: "Although we already have a joint venture with TPV Technology, we must go into the overseas markets if we want to expand our presence in the thin film transistor liquid crystal display (TFT-LCD) monitor market.''

He added that a team of BOE managers, including company Chairman and Chief Executive Wang Dongsheng and Chen himself, met investors and analysts in Hong Kong to lobby for their support.

Chen explained that a TFT-LCD panel production line can make 11 million panels a year, but the annual production of OTPV, its joint venture with TPV, makes about 3.1 million monitors, so his company must seek more production facilities for the TFT-LCD line that BOE has started to build in Beijing at a cost of US$1.2 billion.

TPV Technology last year produced 9.1 million TFT-LCD monitors. With the acquisition of a 26.36 per cent stake in TPV Technology, BOE will be able to find sufficient downstream demand and build a complete industrial chain from LCD panels to monitors.

BOE last year acquired the TFT-LCD arm of the South Korean semiconductor giant Hynix for US$380 million and early this year it started to build a fifth-generation production line in Beijing at a cost of US$1.2 billion.

The acquisition of the stake in the Singapore and Hong Kong-listed TPV will not only increase the production capacity of BOE but also enable the company to seek more opportunities in the capital market.

Dong Zhiqiang, a senior information-technology industry analyst with Beijing-based China Securities, said: "It is a good deal for BOE Technology with the control of TPV's monitor production capacity and its listing position on the Hong Kong and Singapore stock markets.''

However, he warned that the aggressive acquisition and intense investment in the TFT line in Beijing by BOE had led to its asset/liability ratio already reaching 75 per cent, according its financial report for the first quarter.

Since most of the HK$1.05 billion will be raised from bank loans, the ratio will be even higher and this may cause some financial difficulties if BOE fails to make a stable profit in the coming years, added Dong.

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