Largan shares down after January sales; TAIEX passes 9,500 points

Taipei--Shares in Largan Precision Co. (???), a smartphone camera lens supplier to Apple Inc., moved lower on Monday morning, underperforming the broader market, after the company reported a 30 percent month-on-month fall in sales for January, dealers said.

However, the company's January sales still beat the figure recorded for the same period last year, indicating that Largan's year-on-year growth momentum remains intact, which could help its share price bounce back after the current correction, they said.

The weighted index on the Taiwan Stock Exchange passed 9,500 points after a rise on Wall Street, where the Dow Jones Industrial Average closed above the 20,000 point mark on Friday.

At 10:18 a.m., shares in Largan had fallen 0.67 percent to NT$4,460.00 (US$144), off an early low of NT$4,425.00, with 157,000 shares changing hands on the Taiwan Stock Exchange, lagging behind the broader market. The weighted index was up 0.59 percent at 9,511.20 points.

"The fall in Largan's shares was just a hiccup. An uptrend in sales remains unchanged for 2017 as more and more international smartphone brands are adopting dual lens cameras," Ta Ching Securities analyst Andy Hsu said.

"In fact, the month-on-month decline in Largan's January sales was in line with an earlier market expectation as the month is a traditional slow season," Hsu said. "The year-on-year sales growth provides evidence that the growth momentum is still there."

In a statement released on Sunday, Largan said that it posted NT$3.804 billion in consolidated sales, down 30 percent from a month earlier but up 18 percent from the previous year.

According to Largan, high-end camera lenses, which command a higher gross margin, still accounted for a majority of the company's sales in January, with 10 mega-pixel lenses or more advanced models making up 70-80 percent of revenue, 8 mega-pixel lenses 10-20 percent and 5 mega-pixel lenses taking about 10 percent.

Dealers said that the month-on-month fall in Largan sales largely reflected the reduced number of working days as the six-day Lunar New Year holiday started on Jan. 27. Adam Lin (???), chief executive officer of Largan, said that production capacity was fully booked to meet demand for customers who requested tailored camera lenses, in particular dual lens designs. Lin said that sales for February are expected to continue to grow year-on-year.

On the back of its efforts to develop high-tech models and improve product mix, Largan's gross margin for the fourth quarter of last year hit a record high of 70.65 percent. "That's why the stock is one of the favorites of foreign institutional investors. As long as foreign investors continue to buy into the stock, an increase in share price could resume after the current fall."

Meanwhile, metal casing maker Catcher Technology Co. (??), also a supplier to Apple, said that consolidated sales for January totaled NT$4.86 billion, down 36.3 percent from a month earlier and 22 percent from a year earlier.

As a result of the sales data, shares in Catcher lost 1.17 percent as they fell to NT$253.00 with 1.67 million shares changing hands on the local main board as of 10:18 a.m.

Source: Focus Taiwan News Channel