Largan Precision Co (大立光), which manufactures lenses used in cameras for smartphones and information technology products, yesterday reported a net income of NT$4.4 billion (US$140.79 million) for last quarter, down 41 percent from the previous quarter, due to a seasonal slowdown. Earnings per share came in at NT$32.86.
On an annual basis, Largan’s net profit jumped 47 percent, but last quarter’s profit still fell short of CIMB Securities Ltd’s estimate of NT$5.1 billion and Yuanta Securities Co’s (元大寶來證券) forecast of NT$4.71 billion.
Sales last quarter were NT$10.57 billion, down 37 percent from the previous quarter, but gross margin increased by 6.09 percentage points to 56.7 percent from the previous quarter, due to declining shipments of camera modules bundled with voice coil motors (VCM), Largan said.
The gross margin last quarter beat Yuanta’s forecast of 50.9 percent and CIMB’s estimate of 51.2 percent.
“We expect sales this month to outpace last month’s NT$3.92 billion, but will be flat next month. The visibility for June is unclear at the moment,” Largan chief executive officer Adam Lin (林恩平) told a teleconference.
Lin declined to offer his guidance for gross margin this quarter, saying that various factors, such as average selling prices, shipments of camera lens modules with VCM, as well as product mix and yield issues, would all affect the firm’s margin performance.
Analysts forecast Largan would see a double-digit percentage rebound in sales this quarter on the back of growing demand for smartphones from non-Apple Inc clients, with CIMB expecting the firm’s revenue to grow by 13 percent from last quarter.
By shipment breakdown, higher-margin 10-megapixel and above products contributed between 20 percent and 30 percent of the firm’s total shipments last quarter, which is higher than the shipment contribution of between 10 percent and 20 percent in the previous quarter.
This is the first time shipments of 10-megapixel and above products accounted for more than 20 percent of the company’s total lens shipments, indicating a trend of migration to higher megapixels.
Largan’s 8-megapixel products accounted for between 40 percent and 50 percent of total shipments, with the 5-megapixel line contributing between 10 percent and 20 percent; 1-megapixel products, including high-definition products, accounted for between 10 percent and 20 percent of total shipments, the company said.
Lin said that apart from the ongoing megapixel migration for smartphones, the growing adoption of dual-camera lens modules and optical image stabilization function remain the key drivers for the company this year.
Largan has started to ship dual-camera lens modules with different functions, and expects shipments of lenses with optical image stabilization function to grow sequentially starting this quarter.
To meet clients’ increasing demand before its new plant begins operations in 2017, Lin said the company has rented two new plants that will become operational in the final quarter of this year.
Besides its smartphone camera lens business, which contributed between 85 percent and 90 percent of Largan’s total revenues, Lin said the firm plans to expand the reach of its contact lens business outside of Taiwan.
“Largan sees China as a potential major market for expanding the contact lens business and the firm is already in talks with some Chinese retailers,” he said.
Largan shares climbed 1.46 percent to NT$2,785 in Taipei trading yesterday, ahead of the firm’s investors’ conference, while the TAIEX gained 1.22 percent.
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