Sales for Largan Precision Co (大立光), the nation’s largest cellphone camera lens maker, are expected to be boosted in the fourth quarter thanks to orders for Apple Inc’s next iPhone release, according to a US-based investment bank.
The iPhone 5, which is expected to be introduced tomorrow in the US, will use an 8-megapixel camera and will drive Largan’s sales despite competition from smaller rival Genius Electronic Optical Co (玉晶光電), according to Citigroup.
“We note that Genius will remain a very meaningful camera lens supplier for the iPhone 5. In fact, we believe Genius could account for 30 percent to 50 percent of iPhone 5 lenses,” Citigroup analyst Kevin Chang (張凱偉) said last week.
Citigroup believes that Genius actually has a higher allocation for the iPhone 4 than Largan, but even if Largan lands only a 50 percent allocation for the iPhone 5, the brokerage expects that Largan could easily grow its iPhone revenue by 80 percent year-on-year next year, driven by share gains and the higher average selling price of 8-megapixel lenses.
“We acknowledge that Apple seems to prefer using Genius when it is technologically feasible. However, the rapid resolution migration allows both Genius and Largan to grow rapidly,” Chang said.
“With 8 megapixels rapidly becoming the mainstream resolution for smartphones, we expect the market to continue to be big enough for both companies to grow in 2012,” he said.
With the upcoming iPhone 5 launch, Citigroup expects Largan to deliver 20 percent to 25 percent quarter-on-quarter growth in the fourth quarter, followed by a strong first quarter next year, with only a 6 percent quarter-on-quarter decline.
Given the depreciation of the New Taiwan dollar, Citigroup has also given a “buy” rating on Largan and has upgraded its target price to NT$860 from NT$800.
The Taichung-based company, whose customers include HTC Corp (宏達電), Apple, Nokia Corp and Research In Motion Ltd, has reported record sales for five consecutive months as of August on rising demand for smartphones.
In the first eight months of this year Largan’s net sales increased to NT$10.43 billion (US$342.5 million), up 44.4 percent from last year.
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