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Largan shares boosted by Q3 results

2018/10/12 15:24:00

Taipei, Oct. 12 (CNA) Shares in Taiwan-based Largan Precision Co., a smartphone camera supplier to Apple Inc., received a significant boost from third quarter results which pointed to a more than 50 percent sequential increase in net profit for the third quarter, dealers said.

The buying also came after a strong technical rebound following a 10 percent slump, the maximum daily decline, on Thursday amid concerns over rising interest rates in the U.S. market, which sent Wall Street into a tailspin on Wednesday, they said.

On Friday, shares in Largan rose 10 percent to close at NT$3,555.00 (US$115) with 1.59 million shares changing hands on the Taiwan Stock Exchange. Led by market heavyweights such as Largan, the benchmark weighted index on the main board ended up 2.44 percent at 10,045.81 after a 6.31 percent plunge on Thursday.

"After yesterday's sell-off, it seems that investors in the local equity market calmed down to some extent today," Hua Nan Securities analyst Kevin Su said. "As for Largan, the third quarter results were encouraging, prompting many investors to pick up bargains."

At an investor conference held on Thursday, Largan reported NT$8.37 billion in net profit for the July-September period, up 52.71 percent from a quarter earlier and also up 7.75 percent from a year earlier.

Earnings per share for the third quarter stood at NT$62.41, compared with NT$41.01 in the second quarter.

Apple and other clients of Largan from the Android camp unveiled new smartphone models in the third quarter to tap the traditional peak season, which strengthened the company's bottom line, Su said.

With an improving product portfolio, which included more advanced camera lenses with higher profit margin, Largan's gross margin -- which reflects the difference between revenue and cost of goods sold -- hit 71.34 percent, up 2.7 percentage points from the previous quarter and also up 3.4 percentage points from a year earlier.

However, at the investor conference, Largan CEO Adam Lin (林恩平), said he was cautious about the company's business outlook for the fourth quarter, adding that demand from the company's clients has been on the decline.

Orders placed by Largan's clients for October are falling from September, and the month-on-month drop is expected to be clearer in November, Lin said.

"However, such cautious comments did not deter investors from buying Largan shares today," Su said. "The market still has hope that smartphone brands, in particular from the Android camp will upgrade their specifications for their next generation gadgets next year."

In the first nine months, Largan's net profit stood at NT$17.89 billion, up 3 percent from a year earlier, with EPS at NT$133.38, compared with NT$129.48 over the same period last year.

(By Han ting-ting and Frances Huang)