Fri, Oct 26, 2012 - Page 13 News List

Lensmaker aims to improve yield rates

EXPECTATIONS:During a conference for investors, Largan’s chief executive said he hoped robust demand would buoy selling prices, profit margin and net earnings

By Crystal Hsu  /  Staff reporter

Largan Precision Co (大立光), Taiwan’s top maker of lenses used in mobile phones, laptops and tablets, said yesterday shipments are to accelerate this quarter from last quarter on strong demand and that the company aims to improve yield rates to boost capacity and earnings.

“With one-month order visibility, we expect shipments in October to be stronger than in September and stronger still in November,” chief executive Adam Lin (林恩平) told an investors’ conference.

Lin, known for his modesty in comments related to business, said customers are generally upbeat about business outlook this quarter and sell-through showing will shape the landscape next year.

The Nantun District (南屯), Greater Taichung-based company supplies lenses for world technology giants Apple Inc, HTC Corp (宏達電), Nokia Oyj and Huawei Technologies Co (華為), but Lin declined to comment on individual customers or to provide details about their contribution to company revenues.

“Most offer guidance for shifts to high-end technology next year and indicate that 8-megapixel lenses will continue to be the mainstream product that currently underpin 30 percent to 40 percent of sales,” Lin said.

Robust demand will hopefully buoy selling prices, profit margin and bottom lines, he said.

Largan posted NT$1.16 billion (US$39.53 million) in net income during the July-to-September period, up 74 percent from the preceding quarter, but down 33.71 percent from the same period last year, company data showed.

Lin attributed the year-on-year decline partly to the recent exchange rate gains in the New Taiwan dollar.

He said foreign currency exchanges incurred more than NT$100 million in non-operational losses last quarter, but generated NT$300 million income a year earlier.

Gross margin rose to 40.8 percent in the third quarter from 37.13 percent three months earlier, but paled compared with the previous year’s level of 45.9 percent, the company said.

Lin said there was room for improvement in production yields, which stand at an acceptable range and the company aims to pursue higher rates while shifting to advanced technology.

The company declined to give guidance on capital expenditure ahead with addition of new manufacturing facilities later this month and forecasts by customers prone to be loose, Lin said.

The firm’s third-quarter results translate into earnings of NT$8.65 per share, stronger than earnings per share (EPS) of NT$4.96 in the second quarter, but lower than the NT$13.01 a year earlier, according to company statistics.

Cumulative EPS declined 33 percent to NT$20.19 for the first nine months, from NT$30.11 last year, as global economic slowdown weakened sales, the company said.

UBS maintains a “buy” rating on Largan shares with a target price of NT$750 on expectations the company is to benefit from product launch demand and better yield rates, the company said in a note.

Largan shares edged up 0.51 percent to NT$595 yesterday, outperforming the TAIEX’s 0.72 percent fall, Taiwan Stock Exchange data showed.

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