Deutsche Bank AG has raised its price target and earnings estimates for Taiwanese smartphone camera lens maker Largan Precision Co (大立光) because of the company’s strong growth prospects from both high-end and mainstream markets.
Deutsche Bank lifted the stock’s price target by 28 percent to NT$2,750 — the second highest among all foreign brokerage firms tracking Largan, behind BNP Paribas’ NT$2,800 — and gave it a “buy” rating.
It also raised its projections for Largan’s earnings per share for this year by 11.0 percent to NT$129.3, for next year by 11.1 percent to NT$169.8 and in 2016 by 10.6 percent to NT$200.7, on expectations of strong growth in average selling price (ASP) and sales volume in the coming years.
“Largan is one of the few supply chain companies able to enjoy ASP upside from premium smartphones and volume growth from mainstream products [via China exposure],” Birdy Lu (呂家霖), a research analyst at Deutsche Bank in Taipei, wrote in a report released on Thursday.
Largan currently generates between 45 percent and 50 percent of its sales from Apple Inc, 8 percent to 12 percent from premium Android phone makers such as HTC Corp (宏達電) and LG Electronics Inc, and 30 percent to 35 percent from Chinese clients like Xiaomi Corp (小米) and Huawei Technologies Co (華為), according to data compiled by Deutsche Bank.
In the high-end market, Deutsche Bank expects Largan’s volume to grow 10 percent a year and its ASP to grow 15 percent a year over the next two years because of its higher penetration of “new” camera designs, such as dual cameras, multi-image cameras and optical zoom cameras.
In the mainstream market, the bank forecast Largan would see 20 percent year-on-year volume growth and 5 percent to 10 percent increases in ASP next year and 2016.
Largan shares rose 0.45 percent to close at NT$2,245 on Friday in Taipei trading, beating the 0.15 percent dip in the broader market.
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