Largan Precision Co Ltd (大立光), which supplies camera lens modules for Apple Inc’s iPhones, yesterday posted a deeper-than-expected 37 percent decline in revenue for last quarter from the previous quarter — to NT$10.57 billion (US$337.7 million) — on seasonally weak demand.
That was despite a strong increase of 50 percent in revenue last month to NT$3.92 billion, from February’s NT$2.62 billion, after customers began shipping new products, according to Largan’s filing with the Taiwan Stock Exchange.
In the fourth quarter of last year, Largan generated NT$16.89 billion in revenue.
UBS had predicted Largan’s revenue would reach NT$12.27 billion, while JPMorgan and Daiwa Capital Markets said the firm would record revenue of NT$11.9 billion and NT$11.79 billion respectively.
Largan chief executive officer Adam Lin (林恩平) in January said revenue might show a slight decline last quarter from the fourth quarter of last year due to seasonal factors, but the figure would show strong annual growth.
On an annual basis, Largan’s revenue jumped about 54 percent last quarter from NT$6.86 billion.
“We believe Largan’s overall momentum should pick up from the second quarter of 2015 onward, given its dominant position in the 13MP and above lens market,” UBS analyst Arthur Hsieh (謝宗文) said in a report released last month.
Largan would benefit from the trend for handset makers to adopt higher-resolution camera lenses for smartphones in an attempt to set themselves apart in the market, he said in the report.
Hsieh retained his “Buy” rating on Largan with a target price of NT$3,000, a 9.89 percent increase from the stock’s closing price of NT$2,730 on Thursday.
He said he expected Largan to earn NT$4.44 billion in net profit, or NT$33.08 per share, down from NT$7.42 billion, or NT$48.14 a share, in the fourth quarter of last year.
Meanwhile, CIMB analysts said Largan would be the biggest beneficiary of the camera up-cycle — upgrades to higher pixel devices — given its global market share of 36 percent last year, strong production yield and patent competence.
Worldwide, smartphones and tablets equipped with advanced 10-megapixel camera lens are expected to account for 20.5 percent of total shipments this year, up from last year’s 13.1 percent, CIMB said.
“Given limited competition and an increase in development, Largan remains our top pick in the components segment,” CIMB said in a report.
It maintained its “Add” rating on Largan.
CIMB expects the megapixel migration and specifications upgrade to outpace the average selling price decline of between 15 and 20 percent annually this year.
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