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Expansion plan, triple lens hopes send Largan shares soaring

2019/01/11 16:22:18

CNA file photo

Taipei, Jan. 11 (CNA) Shares of Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., got a big boost Friday from its decision to keep its production capacity plan unchanged despite concerns over weaker than expected shipments of iPhones, dealers said.

The buying also resulted from Largan's announcement Thursday that it expects to generate more sales in 2019 from triple lenses, which have higher profit margins than other lenses, they said.

Such optimism helped Largan shares overcome the 20 percent decline in fourth quarter net profit it reported, dealers said.

Largan shares soared 8.23 percent to close at NT$3,550.00 (US$115), with 1.39 million shares changing hands on the Taiwan Stock Exchange (TWSE), where the weighted index ended up 0.4 percent at 9,759.40.

"The stock had been hammered by worries over iPhone sales in recent sessions," Hua Nan Securities analyst Kevin Su said. "Judging from today's movement, fears over slow iPhone sales have been largely digested even though Largan reported a fall in profit last quarter.

"It seemed that investors still have faith in the ability of Largan's technology to stay ahead of the competition over the longer term," Su said.

At an investor conference Thursday, Largan CEO Adam Lin (林恩平) said a plan to expand production capacity remains on course, even as the market expects falling global demand in 2019.

Lin's comments echoed a statement by Largan on Wednesday that said the company remained upbeat about its business outlook for the mid- to long-term despite weakness in global demand in the short term.

Largan built a new plant in Taichung in 2016 to double its production capacity, and it acquired a big plot of land and building in 2017 to further expand its capacity.

It said in the statement Wednesday that it is looking for additional land to buy and build another new plant.

At the investor conference, Lin said a growing number of Largan clients are equipping their smartphones with high-end triple lenses this year, and indicated that the company will unveil "new technology" by the end of the year to further drive sales growth.

Largan said its net profit in the October-December period was down 22.6 percent from a quarter earlier at NT$6.48 billion, reflecting weaker than expected global smartphone sales, including the three newest iPhones that were launched in September.

Consolidated sales fell 23.81 percent from a quarter earlier to NT$12.45 billion, and gross margin, which reflects the difference between revenue and cost of goods sold, fell 1.9 percentage points from a quarter earlier to 69.44 percent.

For 2018 as a whole, Largan's net profit was down 6.18 percent from a year earlier to NT$24.37 billion, translating to earnings per share was NT$181.68, down from NT$191.77 in 2017.

Consolidated sales were down 5.98 percent year-on-year at NT$49.95 billion, and gross margin fell 0.6 percentage points from a year earlier to 68.77 percent.

(By Han Ting-ting and Frances Huang)