Largan Precision Co (大立光), which supplies camera lens modules for Apple Inc’s iPhones, is likely to see a double-digit percentage rebound in sales this quarter on growing demand for smartphones from non-Apple clients, after posting weaker-than-expected sales for last quarter, analysts said last week.
Moreover, the company is to reap the most benefit from the smartphone industry’s aggressive camera specification upgrades and market share gains by Huawei Technologies Co (華為) and Xiaomi Corp (小米) in China and emerging markets, analysts said.
Largan is scheduled to host an investors’ conference on Thursday to offer its detailed financial results for the past quarter, as well as guidance for this quarter and the remaining quarters of the year.
PEAK SEASON
“We expect the company to aim for a 13 percent growth in sales this quarter, thanks largely to the announcement of several flagship Android smartphone models creating a peak season and the iPhone’s strong momentum extending into this quarter,” CIMB Securities Ltd analyst Felix Pan (潘俊宏) said in a note released on Tuesday.
Daiwa Capital Markets Inc analyst Kylie Huang (黃奎毓) predicted in a separate note that Largan would post a strong 17 percent quarterly sales increase to NT$12.4 billion (US$396.9 million) on new product releases by Chinese phone manufacturers.
Largan shares, which are the most expensive stocks in Taiwan, fell by 1.28 percent last week to NT$2,695, versus the broader market’s 0.18 percent rise, after the company on April 5 said sales in the January-to-March quarter fell by 37 percent from the previous quarter to NT$10.57 billion. The figure fell short of CIMB’s estimate of NT$12 billion and Daiwa’s forecast of NT$11.79 billion.
PROMISING
The two brokerages also expect a promising sales outlook for Largan in the second half of the year, with Daiwa expecting Apple’s new iPhone product cycle to drive solid revenue growth later this year, while CIMB expects multiple camera lenses and the growing adoption of the optical image stabilization function as the key drivers for Largan this year.
“We expect Largan’s annual revenue to grow by 27 percent annually to NT$58.02 billion this year from NT$45.81 billion last year, driven by growing production volume of iPhones this year,” Huang said on Tuesday.
IMPROVEMENTS
Daiwa forecast iPhone production volume could grow by 22 percent to 232 million units this year from last year’s 190 million units, and Largan would be a major beneficiary of this volume growth given its leading position in the supply chain, with quarterly sales growth of between 20 percent and 30 percent, she said.
Chinese smartphone brands are expected to adopt higher-margin lens specifications — such as high-megapixel lenses, the use of dual camera lenses and optical image stabilization, which would also benefit Largan’s profitability this year, she said.
Additionally, the next generation of iPhones, which some speculate will launch in the second half of the year, might adopt a 13 megapixel camera lens instead of an 8 megapixel lens, Pan said, adding that it should boost Largan’s average selling price in the second half of this year.
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