Lensmaker set to profit

Largan Precision Co (大立光電), the nation's largest maker of digital camera lenses, yesterday said that full-year earnings will jump 14 percent, helped by the popularity of camera phones.

In its latest financial projection, the Taichung-based company said it will earn NT$1.55 billion in net profit, or NT$16.12 per share, this year on revenue of NT$2.85 billion, up 16 percent from NT$2.46 billion the previous year.

"A big chunk of Largan's income comes from [lenses for] cellphones. And we expect our growth will be in line with the handset sector, which will have a respectable expansion this year," Largan chairman Lin Yao-yin (林耀英) told investors yesterday.

Last year the penetration of camera phones around the world was about 16 percent and the ratio will grow to about 25 percent this year, Lin said.

The global mobile phone market will continue to expand this year to surpass 500 million units from 460 million last year on increasing third-generation and camera-phone shipments, according to an IDC forecast.

Largan's first-quarter earnings more than tripled to NT$3.56 billion from NT$1.75 billion a year ago, but a 31-percent decline from the peak fourth quarter of last year. Earnings per share rose to NT$3.72 from NT$1.83.

Revenues during the first three months soared about 80 percent to NT$7.53 billion from NT$4.19 billion a year earlier.

"The financial results fall in the low end of my forecast, but the NT$30 million currency exchange loss surprised me," said Helen Chen (陳佩君), an analyst at Polaris Securities Co (寶來證券).

Looking ahead, the company expected a flat April-June performance.

"Second-quarter sales will largely be unchanged from the slow first quarter, which turned out to be a stronger-than-expected season," Lin said.

In addition to that higher base, Lin said the transition to new handset models was a major factor behind the lukewarm second quarter.

"The comments came unexpectedly as the second quarter is usually a season when the business starts to gather steam before the peak second half," said Lu Chia-lin (呂家霖) of Yuanta Core Pacific Securities (元大京華證券).

But Largan has been very conservative about its financial forecast, so Lu said he still expects a 10-percent rise in revenue during the current quarter.

"Largan still has good prospects as consumer electronics makers are using more lenses in order to improve image quality," Lu said.

Largan on Tuesday proposed to give shareholders a dividend of NT$6 per share.

Eyeing the high returns, investors have snatched up Largan shares recently in the wake of the strong profitability, Chen said.

In the past month, the stock prices of Largan have surged about 25 percent to NT$449 after a 0.44-percent decline on the benchmark TAIEX yesterday.

Despite the apparently lucrative return, Chen suggested investors keep hands off the Largan shares, as the share prices will likely fall.