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Largan shares end down after Q2 results as investors lock in gains

2019/07/12 16:43:54

Taipei, July 12 (CNA) Shares in Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., closed lower Friday, off an early high, despite an improvement in second quarter results as investors locked in their gains posted in recent sessions, dealers said.

Largan shares opened higher and moved to the day's high of NT$4,360.00 (US$140.6) in the mid-morning session in the wake of the second quarter results. However, selling started after 10:30 a.m. and accelerated in the afternoon session, pushing the stock into negative territory by the end of the session, dealers said.

The stock closed down 2.32 percent at NT$4,205.00, with 969,000 shares changing hands on the Taiwan Stock Exchange, where the benchmark weighted index ended down 0.18 percent at 10,824.35 Friday.

At an investor conference held Thursday, Largan said its net profit for the April-June period rose 29.63 percent from the previous quarter and grew 19.07 percent from a year earlier to NT$6.55 billion on consolidated sales of NT$14.08 billion, up 43.33 percent year-on-year and 14.51 percent quarter-on-quarter.

Largan's earnings per share for the second quarter stood at NT$48.84, compared with NT$41.04 over the same period of last year and NT$37.68 in the first quarter.

"Judging from Largan share movements in recent sessions, I think the positive leads from its second quarter results have been factored into its share price," Hua Nan Securities analyst Kevin Su said.

"After yesterday's investor conference, it was not surprising that investors rushed to lock in the recent upturn today," Su said. According to Su, Largan shares have risen about 30 percent since the stock dipped to an intraday low of NT$3,255.00 on June 6.

Largan said its gross margin, which reflects the difference between revenue and cost of goods sold, rose from 61.17 percent in the first quarter to 69.6 percent in the second quarter, the second highest level ever, trailing only 71.3 percent in the third quarter of last year.

The second quarter gross margin also beat an earlier market estimate of around 68 percent.

"The higher profit margin largely reflected an improvement in Largan's product mix, with advanced camera lenses weighed more to boost its bottom line," Su said.

Largan said 20 mega-pixel lenses or more sophisticated devices accounted for 20-30 percent of its total sales in the second quarter, 10 mega-pixel lenses made up 50-60 percent and 8 mega-pixel lenses 10-20 percent.

In the first half of this year, Largan posted NT$11.60 billion in net profit, up 22 percent from a year earlier, with EPS of NT$86.51, compared with NT$70.97 over the same period of the previous year.

At the investor conference, Adam Lin (林恩平), chief executive officer of Largan, said he expects sales in July to beat the figure in June, but it remains to be seen whether revenue for August will continue to grow since orders from some buyers have not yet been confirmed.

Largan reported NT$4.076 billion in consolidated sales for June, down 19 percent from the previous month and 10 percent from a year earlier.

"The caution toward August shows the impact of the Washington-Beijing trade disputes, which have prompted many foreign buyers from placing longer term orders with suppliers and Largan is no exception," Su said.

"In addition, we better keep a close eye on shipments of China-based Huawei Technologies Co., which is one of Largan's major clients, as the Chinese firm faces business restrictions imposed by the United States," Su said.

Su said it was also worth watching how the next generation iPhones, expected to be unveiled in September, are received in the market since few are expecting strong sales.

(By Han Ting-ting and Frances Huang)
Enditem/AW