Largan has record-high margins

Largan Precision Co (大立光), the nation's leading maker of camera lenses, yesterday posted record high gross margins, thanks to strong shipments of camera-phone lenses.

Margins the second quarter hit new highs of 61.2 percent, compared to 40 percent in the same period last year, and 61 percent in the first quarter, the company told investors yesterday.

Net in the second quarter was NT$794.6 million (US$22.9 million), or NT$6.93 per share, up 386 percent from last year's NT$163.6 million, or NT$1.43 per share, it said.

"The third quarter will be better than the second, as our orders have been lining up till November," said chairman and chief executive Scott Lin (林耀英), adding that whole-year revenues are going strong. He declined to give detailed numbers.

While results did not surprise analysts, Vincent Chen (陳豊丰) from CLSA Ltd said that the achievement of higher growth next year will depend on the company's new business segments.

The Taichung-based Largan -- which supplies optical lenses for camera phones, digital still cameras and multifunctional printers -- will venture into two new businesses next year, according to Lin.

He said that it will move into a totally new segment, which is just taking off and "full of potential," as well as focusing on a second segment that already exists, but in which the company says it has "better technology."

Lin refused to elaborate.

However, he said the company's long-term strategy is to diversify risks on camera handsets, whose growth momentum will continue over the next three years.

His comments raised curiosity among analysts, with one, who asked not to be named, speculating that the company must be getting ready to set a new milestone, as Lin would normally not disclose any details unless he is fully ready.

For the first six months of the year, mobile-phone lenses accounted for 78 percent of Largan's total revenues, while 11 percent were generated by digital cameras, the company's data showed.

Multi-functional made up 7 percent, while projectors took 1 percent, it said.

Meanwhile, Lin said that the company's shipments of one-megapixel camera-phone lenses have surpassed lower-resolution video-graphics-array (VGA) lenses to over 50 percent, while two-megapixel lenses are gaining momentum.

One two-megapixel lenses will be the mainstream resolutions used in the handset industry, while three megapixel lenses will start to gain ground in fourth quarter next year at the earliest, he said.

However, "VGA lenses will still play a part in our shipments, as cameras become standard on low-end phones," he said.

Largan's closed down 1.25 percent to NT$709 yesterday on the Taiwan Stock Exchange.