Largan shares end above NT$4,000 on Q4 results

Taipei-Shares of Largan Precision Co., a smartphone camera lens supplier to Apple Inc., got a boost from its results for the fourth quarter, staging a technical rebound from a recent slump to close above NT$4,000 (US$135) Friday, dealers said.

However, since the high-end smartphone camera lens maker remained cautious about its sales for January and February, how the stock will perform remains to be seen before Apple holds an investor conference in early February, which is expected to give more clues about shipments of the premium iPhone X, the dealers said.

Largan shares closed up 10 percent, the maximum daily increase, to end at NT$4,100 with 1.57 million shares changing hands on the Taiwan Stock Exchange, where the weighted index ended up 0.68 percent at 10,883.96 points.

Soon after the local equity market opened, the stock attracted strong buying as investors took cues from its earnings for the October-December period of last year, and momentum accelerated to push up its share price to the day's high of a 10 percent rise in the mid-morning session, with strength continuing to the end of the session, the dealers said.

"The stock had come heavy selling pressure amid concerns over global iPhone X sales in recent sessions," Hua Nan Securities analyst Kevin Su said. "Investors simply seized its fourth quarter results to pick up bargains."

Largan shares closed at NT$5,985 Nov. 3, 2017, a historic closing high for the company. But the stock encountered selling amid worries over iPhone X shipments and moved lower in recent sessions to end at a one-year low of NT$3,730.00 Thursday, a 37.7 percent plunge from Nov. 3.

In an investor conference held Thursday, Largan said its net profit for the fourth quarter hit a new high of NT$8.61 billion in net profit, up 10.8 percent from the third quarter, with earnings per share (EPS) of NT$64.18, also a record high.

In the October-December period, Largan's gross margin -- the difference between revenue and cost of goods sold -- rose 3.75 percentage points from a quarter earlier to 71.68 percent, also a record high in the company's history. The fourth quarter figure was up 1.02 percentage points from a year earlier.

For the whole of 2017, Largan posted NT$25.98 billion in net profit, up 14 percent from a year earlier, with EPS of NT$193.66, the highest level for the company, while its consolidated sales rose 10 percent from a year earlier to NT$53.13 billion.

"The higher margin for the fourth quarter reflected an increase in high-end smartphone camera lens shipments at a time when more and more international brands have adopted more advanced specifications for their devices," Su said.

"But the 2017 EPS failed to meet an earlier market estimate of more than NT$200," Su said. "The shortfall could result from lower-than-expected iPhone X sales," Su said.

Su said there will be no clear picture about the market's reception of the signature iPhone until Apple's Feb. 1 investor conference.

"Moreover, Largan said yesterday that its sales will fall in January from December and drop further in February from January. That could limit the upturn of the stock down the road," Su said.

After breaching NT$4,000, Su said, the stock could face stiff technical resistance soon and enter consolidation mode.

Source: Focus Taiwan News Channel