Largan Precision Co (
"Increasing orders for our mobile-phone lenses and improved technology helped drive up our profits in the third quarter," company spokesman Charles Chiu (
The firm's consolidated sales amounted to NT$1.06 billion in the third quarter, a leap from NT$702 million in the previous quarter and NT$680 million for the same period last year.
The firm reported gross margin of 58 percent for the quarter, up from 40 percent in the second quarter and 43 percent in the first, according to the company.
The Taichung-based company, which supplies optical lenses for camera phones, digital cameras and multifunctional printers, will continue to bank on the handset industry for growth, Chiu said.
Mobile-phone lenses were the biggest sales contributor, accounting for 66 percent of sales in the third quarter, up from 56 percent in the first half, according to Chiu.
Digital-camera lenses were the second-largest revenue generator, contributing 17 percent of sales, unchanged from the level in the second quarter.
"Industry data shows that worldwide handset shipments will grow by around 30 percent next year," chairman Lin Yao-yin (林耀英) said, adding that it is a promising segment as cameras have become standard on mobile phones.
Lin predicted better prospects for the fourth quarter, driven mainly by strong phone lens shipments and continued technology improvement. He declined to offer target numbers.
Largan's performance beat analysts' expectations.
"The third-quarter margins were beyond the industry's projection of around 50 percent," said Ken Yu (余文耀), an analyst with SinoPac Securities Corp (建華證券).
According to Yu, improvements in yield rates, expanded revenue and the weakening New Taiwan dollar contributed to Largan's better-than-expected margin.
He expects the firm's robust performance to continue this quarter, as handset orders are still being received.
However, while Largan leads its peers in the 1.3 megapixel optical lens segment, its commitment to research in 2 megapixel units will be critical to sustain the momentum through next year, he said.
Last week Morgan Stanley reiterated its "overweight" rating on Largan, with a target price of NT$336.
Shares of Largan rose NT$3.5 to close at NT$279 on the Taiwan Stock Exchange yesterday.
In a research note released on Oct. 13, Morgan Stanley analyst Jasmine Lu said that Largan will see robust revenue and profit year-on-year growth next year, citing solid market share, demand for megapixel camera-phone lenses and an improving yield rate.
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