Largan dives; selling spreads to other 'Apple concept stocks'

11/06/2018 11:47 AM

Taipei, Nov. 6 (CNA) Shares of Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., plunged Tuesday morning after the company reported disappointing sales figures for October, usually the peak season for the global high-tech sector, dealers said.

The sell-off suffered by Largan spread to other Taiwanese suppliers to Apple amid rising concerns of lower than expected global demand for the new iPhone models unveiled in September that could push down shipments, they said.

As of 11:01 a.m., shares of Largan had shed 5.82 percent to NT$3,235.00 (US$30.81), with 815,000 shares changing hands on the Taiwan Stock Exchange, where the benchmark weighted index was down 0.71 percent at 9,819.53.

Largan shares immediately came under pressure soon after the market opened, and selling escalated as the morning went on without any signs of a rebound, MatserLink Securities analyst Tom Tang said.

"The weakness came after Largan's poor sales report for October," Tang said.

"The company had said it would have a weaker October, and the figures were proof of that, leading investors to think that the newest iPhones have failed to stir up strong buying interest," Tang said.

"Many potential consumers may be finding the new iPhones too expensive compared to models provided by other international smartphone brands, and that has had an impact on consumption," Tang said.

"More importantly, the iPhone product line lacks attractive specification upgrades."

According to Tang, Apple accounts for about 40 percent of Largan's total sales. "So the impact on the company has been obvious in the current traditional peak season," he said.

In a statement released Monday, Largan said its consolidated sales for October fell 6 percent from a month earlier and 7 percent from a year earlier to NT$5.21 billion.

That was the company's lowest single month sales figure since June 2018, when it posted sales of NT$4.51 billion.

In October, 10 megapixel lenses for more advanced devices, which command a higher profit margin, accounted for 50-60 percent of Largan's total revenue, 8 megapixel lenses accounted for 10-20 percent and 2 megapixel lenses represented another 10-20 percent.

In the first 10 months of this year, Largan's consolidated sales totaled NT$42.72 billion, little changed from a year earlier.

"Largan's poor sales for October sparked fears over the prospects for iPhone shipments in the fourth quarter and even for Apple's sales next year if the company fails to come up with more attractive products," Tang said.

"I'm also worried about continued trade friction between the United States and China, which has hurt and will continue to hurt iPhone sales in the Chinese market," Tang said.

Among other falling "Apple concept stocks," iPhone assembler Hon Hai Precision Industry Co. had lost 2.38 percent to NT$78.10, metal casing maker Catcher Technology Co. had dropped 6.55 percent to NT$217.00, and printed circuit board supplier Career Technology (Mfg.) Co. had fallen 8.35 percent to NT$38.60 as of 11:01 a.m.

Largan anticipated that sales could continue to fall in November as some of its clients are cutting back their orders.

"Largan shares could test the lowest closing level of the year of NT$3,000 on April 9," Tang said. "If the stock fails to keep itself above that level, more selling is expected to follow."

(By Han Ting-ting and Frances Huang)


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