Largan shares hit new high on iPhone hopes

Taipei--Shares of Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., hit another record high Tuesday as investors expect the next generation iPhones to boost its shipments in the second half of the year, dealers said.

Buying in Largan also spread to other Apple suppliers in Taiwan, driving significant gains in the broader market, they said.

Largan, the most expensive stock on Taiwan's market, gained 3.83 percent to close at NT$5,285.00 (US$173) after hitting an intraday high of NT$5,325.00 on the Taiwan Stock Exchange (TWSE), where the weighted index ended up 1.22 percent at 10,415.57.

The closing price and intraday high were both records for the company.

Among other "Apple concept stocks," Taiwan Semiconductor Manufacturing Co. (TSMC), which is believed to be supplying the A11 processor for the new iPhones, gained 2.91 percent to close at NT$212.00.

Hon Hai Precision Co., an assembler of iPhones and iPads, gained 2.60 percent to end at NT$118.00.

Largan outperformed the broader market on Monday, rising 2.62 percent to push above the NT$5,000 mark for the first time since June 26, while the weighted index fell 0.07 percent. That momentum continued Tuesday.

"For such an expensive stock, I'd guess that foreign institutional investors stood on the buy side today," MasterLink Securities analyst Tom Tang said. "As long as foreign institutional buying continues, Largan's will likely continue to rise."

According to the TWSE, foreign institutional investors owned a 53.11 percent stake in Largan as of Monday.

Shares in Taiwan are usually sold in minimum blocks of 1,000 shares, meaning investors would have to spend about NT$5.20 million to buy Largan stock, an amount out of the reach of many retail investors.

"Continued optimism over Largan's shipments in the second half pushed up the stock soon after the market opened today on expectations that Apple will launch the new iPhones later in 2017, the 10th anniversary of the gadget," Tang said.

In a research note, a European brokerage cited sources from Apple's supply chain as saying that the new iPhone models equipped with a LCD display are scheduled to hit the market in late September, and the models equipped with an advanced organic light-emitting diode (OLED) screen are scheduled to go on sale in late October.

The brokerage said Largan and other iPhone component suppliers will see their sales accelerate soon, and assemblers, like Hon Hai, will see their revenue pick up after that.

Including the European brokerage, several other foreign brokerages have raised their target price for Largan shares to above NT$6,000.00, with the highest estimate hitting NT$6,180.00.

CNA cannot identify the brokerages because media outlets in Taiwan are not allowed to report the name of a foreign brokerage when it gives price forecasts for specific stocks.

Source: Overseas Community Affairs Council