Largan Precision Co (大立光), which supplies camera lenses to Apple Inc, yesterday reported record-high quarterly net profits at NT$3.4 billion (US$112.54 million) for last quarter, boosted by growth in shipments of higher-resolution camera lens modules for smartphones.
Last quarter’s figure slightly exceeded analysts’ expectations of NT$3.2 billion.
Largan’s net profit last year was also a record high at NT$9.6 billion thanks to expansion in business scale, Largan’s financial report said.
Largan chief executive Adam Lin (林恩平) told investors in a conference call that the company “can forecast that sales would achieve year-on-year growth this month and next month.”
Largan’s quarterly profits were driven mainly by increased shipments of camera modules used in Apple’s iPhone 5S, Taishin Securities Investment Advisory Co (台新投信) analyst Mark Yen (顏明賢) said by telephone.
Among all smartphone vendors, Apple contributed up to 45 percent to 50 percent of Largan’s total sales last quarter, followed by a 15 to 20 percent share by Chinese smartphone makers, including ZTE (中興), Huawei Technologies (華為), Xiaomi (小米) and Lenovo Group Ltd (聯想), Yen said.
Apple shipped 55 million units of its iPhone products last quarter, up 61.76 percent from 34 million units in the previous quarter, and half of them were equipped with Largan’s camera modules, Yen said.
Strong sales of Apple’s iPad Air tablet also helped boost Largan’s sales and net profits last quarter because up to 70 percent to 80 percent of Apple’s iPad products were equipped with the company’s camera modules, he said.
Largan said shipments of camera modules with resolutions of more than 10 megapixels accounted for 40 percent to 50 percent of its total shipments last quarter, followed by 5 megapixel modules with a 10 percent to 20 percent share, and 1 megapixel modules with a 20 percent to 30 percent share, it said.
The camera lens module used in smartphones is the biggest revenue source for the firm, accounting for as much as 85 percent of its revenue last quarter.
Last quarter’s gross margin reached 48.27 percent, up 1.16 percentage points from 47.11 percent a quarter ago, due to higher utilization rate, improved yield rate and depreciation of the New Taiwan dollar against the US dollar, Largan said.
Lin said many of Largan’s clients had been considering adopting greater-than-10-megapixel camera modules for their new smartphone products.
“The ‘pixel migration’ is getting more obvious, and we also observed that many Chinese smartphone vendors now demand higher-resolution camera modules for their products, which is helpful to Largan’s sales and gross margin,” Lin said.
Lin did not provide guidance on the company’s expectations for this quarter.
JPMorgan analyst William Chen (陳威元) forecast that Largan’s sales would plunge 30 percent this quarter from NT$9.3 billion last quarter due to seasonal factors.
With demand for Apple’s iPhone 5S diminishing before the company’s new-generation product debuts, Largan’s sales next quarter are expected to decline further by 10 percent quarter-on-quarter, Chen said.
However, in the long run, Chen said he expects Largan’s profitability to remain solid this year because of the ongoing pixel migration, which is expected to happen not only to Apple, but the top smartphone vendors in China.