Shares of Lite-On Technology Corp (光寶科技) yesterday outpaced the broader market by rising 1.67 percent, after the electronics component maker’s surprise announcement on Wednesday that it is selling its camera module for smartphones business to Hong Kong-based LuxVisions Innovation Ltd (立景創新) for US$360 million.
LuxVisions was founded by the Wang family of China-based Luxshare Precision Industry Co (立訊精密).
Lite-On’s share price surged 3.69 percent to NT$43.55 shortly after the market opened before paring its gains to close at NT$42.70 in Taipei tading.
Lite-On said in a press release on Wednesday evening — a day after it told an earnings conference that its camera module business would break even this year — that the deal with LuxVisions involves the business unit’s operations and assets, including inventory, manufacturing equipment, 5,000 employees, technology, intellectual property, clients and supplier relationships, and accrued warranties.
Aside from a cash payment of US$360 million, Lite-On will receive a 10 percent stake in LuxVisions.
The company expects to complete the transaction before the end of next quarter, Lite-On investor relations official Julia Wang (王玉玲) said by telephone yesterday.
“We believe the decision to sell the business will improve Lite-On’s product portfolio, as the profit margin on camera modules used in smartphones has been below the corporate average for years due to intensified competition in the industry,” Julia Wang said.
“Lite-On had been discussing the deal for some time... The reason we did not share it with investors on Tuesday was because the board meeting was held a day later,” she said.
Lite-On is selling only its camera module business for mobile devices; it still operates and manufactures camera modules used in automobile, virtual reality (VR), augmented reality (AR) and 3D sensing products, which enjoy higher margins, she said.
“It is a win-win situation for Lite-On,” she said.
Yuanta Securities Investment Consulting Co (元大投顧) analyst Jeff Pu (蒲得宇) said in a note yesterday that by shifting its focus to higher-value products, Lite-On’s earnings visibility and margin profile would significantly improve, leading to a re-rating for the company.
Lite-On chief executive officer Warren Chen (陳廣中) on Tuesday told investors that the camera module unit’s revenue should see quarterly improvements and reach between NT$38 billion and NT$40 billion (US$1.3 billion and US$1.36 billion) this year.
The company expects its overall revenue this year to rise by a single-digit percentage from last year’s NT$214.57 billion, supported by its camera module, solid-state drive and power management businesses.
Lite-On will continue to focus on cloud computing, LED components, LED outdoor and automotive lighting, automotive electronics, biomedical technology and industrial automation, Julia Wang said.
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