Sat, May 25, 2013 - Page 13 News List

Largan benefitting from demand for high-end lenses

By Kevin Chen  /  Staff reporter

Largan Precision Co (大立光), the nation’s leading maker of handset lenses, is expected to post stronger revenue and profit growth in the second half of this year, bolstered by the trend toward high-pixel resolution lenses in China, SinoPac Securities Co (永豐金證券) said yesterday.

The company — which counts Apple, HTC (宏達電), Motorola and Nokia as customers — should also benefit from new shipments to South Korean clients such as Samsung and LG Electronics, further securing its leading position in the global lens market, the brokerage said in a note.

“With superior technology in high-end camera lenses, Largan is expected to further expand its market share in China this year,” SinoPac said.

In the first quarter of the year, 75.28 million smartphones were sold in China, up 141.5 percent from the same quarter last year and 32.2 percent from the fourth quarter of last year, the Beijing-based research firm Analysis International reported on Monday.

Another report released by US researcher Gartner Inc earlier this month also showed that smartphone sales in China increased 108 percent year-on-year to 70 million units in the first quarter, with China accounting for 33 percent of global smartphone sales, up from 22 percent in the same period last year.

“Overall, Largan will enjoy a compound effect from the fast growth in China’s smartphone demand and the industry’s aggressive pixel migration,” SinoPac said.

The brokerage raised its price target for Largan to NT$1,200 from NT$870 after revising its forecast for the company’s earnings per share (EPS) this year to NT$57.20 from NT$54.30.

Largan’s net profit is expected to reach NT$7.67 billion this year, up 37.5 percent from last year, and its revenue could rise 28.3 percent year-on-year to NT$25.74 billion, SinoPac said.

Another brokerage, Capital Securities Corp (群益證券), said Largan’s sales this quarter could beat forecasts because of robust shipments to non-Apple clients. It added that Largan could sustain its growth momentum in the second half following launches of new iPhones and other products.

Apple is expected to release its next iteration of the iPhone as well as a lower-priced iPhone in th third quarter, Capital said in a note on Monday.

“In addition, demand for high-end handset lenses with 10-megapixel resolution and a large aperture is expected to accelerate this year, implying higher entry barriers for Largan’s competitors,” Capital said.

The brokerage revised up its second-quarter revenue estimate for Largan to NT$5.89 billion from NT$5.25 billion and adjusted up its net profit forecast to NT$1.41 billion, or EPS of NT$10.51.

For the full year, Largan’s revenue is expected to increase 36.7 percent to NT$27.43 billion and its net profit is forecast to rise 46.6 percent to NT$8.17 billion, or EPS of NT$60.95, said the brokerage, which maintained its “buy” rating on the stock with a price target of NT$1,050.

Largan shares rose 2.69 percent to close at NT$955 yesterday, pulling back from an intraday high of NT$974.

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