Largan shares boosted by Q2 results, end above NT$5,000 mark

Taipei, Shares of Largan Precision Co., a smartphone camera lens supplier to Apple Inc., got a boost from its second- quarter earnings report, to breach the NT$5,000 (US$164) mark Friday, dealers said.

The buying also reflected optimism toward its bottom line, as Largan has taken the lead over its peers in high-end camera lens production, which is expected to help the company secure more orders and further push up its earnings, the dealers said.

Shares of Largan gained 2.23 percent to close at NT$5,040.00, with 1.07 million shares changing hands on the Taiwan Stock Exchange, where the weighted index was up 1.17 percent to end at 10,864.54. Largan served as one of the drivers to push up the broader market on Friday.

Soon after the local equity market opened, the most expensive stock in the local market attracted strong buying, as investors were encouraged by its improvement in the second-quarter earnings, the dealers said.

"Largan has benefited from its competitive production know-how to strengthen its profitability," MasterLink Securities analyst Tom Tang said. "Before the release of the second-quarter results, the stock had moved ahead amid optimism over its earnings for the second quarter."

On Thursday, Largan shares ended up 2.71 percent before it held an investor conference after the equity market closed.

In the investor conference, Largan said it posted NT$5.50 billion in net profit, up 36.87 percent from a quarter earlier, and also up 16.69 percent from a year earlier, with earnings per share at NT$41.01, compared with NT$29.96 in the first quarter.

Its second-quarter gross margin -- the difference between revenue and cost of goods sold -- stood at 68.61 percent, up 2.28 percentage points from the first quarter and also up 1.93 percentage points from a year earlier.

Largan said that due to its efforts to expand production capacity to meet demand, its profit margin increased accordingly.

In the investor conference, Largan CEO Adam Lin (???) said that judging from the orders it has secured, the company is expected to report higher sales in July than June, and its August sales are expected to beat the July figure. Lin said Largan is expected to have a better third quarter than the second.

"Investors are picking up the stock as they are upbeat about its earnings prospects," Tang said. "I think Apple has started to place orders to Largan for its next generation iPhones" which could be launched in September. Apple accounts for about 40 percent of Largan's total sales.

"In addition to Apple, major Chinese smartphone brands, in particular Huawei Technologies, are also Largan's customers. Huawei's orders also serve as one of the drivers to Largan's earnings growth," Tang said.

According to Largan, more and more international smartphone brands are adopting more advanced camera lenses, including 20 megapixel lenses, which analysts said will further boost Largan's earnings.

Lin said Largan is developing new camera lens technology but declined to disclose any details about these efforts. He said the company is planning to expand its production capacity by seeking a large plot of land and an expanded workforce, with the expectation that the production expansion plan will be realized in 2020.

Source: Focus Taiwan News Channel