Largan upbeat on expected shipments

CLEAR VISION::A majority of Largan Precision Co’s clients are adopting larger-pixel cameras in their latest products, boosting shipments and the firm’s margin

By Helen Ku  /  Staff reporter

Fri, Apr 26, 2013 - Page 13

Largan Precision Co (大立光), the nation’s leading maker of handset lenses, yesterday said it remains upbeat about this quarter because its clients plan to ship more high-end smartphone and tablet models equipped with high-end mega-pixel cameras from this month.

As a majority of its clients are adopting larger-pixel cameras in their smartphones and tablets, Largan said 10-megapixel lenses and those greater than 10-megapixel are forecast to account for nearly 20 percent of its total shipments this quarter, a move that will help boost its margin.

“We forecast average prices will rise this quarter with more high-end camera lenses shipped,” Largan chief executive Adam Lin (林恩平) told investors in a conference call.

“However, it is still hard to say by how much gross margin will grow this quarter, because of uncertainties such as capacity expansion speed, product yield rate, foreign exchange rate fluctuations and price declines for lower-end camera lenses,” he added.

Lin’s remarks came as the Greater Taichung-based company reported that first-quarter net profit more than doubled to NT$1.85 billion (US$62.34 milion) from NT$882 million during the same period last year.

Earnings per share were NT$13.79 in the first quarter, up 109.57 percent from NT$6.58 last year, but down 35.53 percent from NT$21.39 in the fourth quarter, the company said.

Gross margin declined slightly to 41.9 percent from 45.2 percent a quarter ago, along with a sequential decline of 41 percent in revenue to NT$5.1 billion, but up from 38.5 percent a year ago, it said.

Daiwa Capital Markets analyst Birdy Lu (呂家霖) said Largan’s first-quarter results were better than expected and the company’s outlook for the second quarter was also stronger than he had expected.

“I am glad that I was wrong — Largan’s second quarter guidance is actually good,” Lu said in a note.

“Good guidance from a conservative company means — this is really good,” he said.

Lu attributed the company’s resilient gross margin to its better production yield, stable average selling prices and foreign exchange gains.

Largan said 97 percent of its camera lenses are used in smartphones, with 13-megapixel camera lenses accounting for between 20 percent and 30 percent of all lens, 5-megapixel lenses for between 20 percent and 30 percent, and 8-megapixel lenses for between 30 percent and 40 percent.

The company counts the world’s top-tier smartphone brands as its clients, including Apple Inc, Samsung Electronics Co, HTC Corp (宏達電), Nokia Oyj and Research In Motion Ltd.

Largan is supplying 8-megapixel lenses to Samsung, with shipments beginning this quarter, Lin said.

Asked if Largan had spotted ideal land for its new plant in Greater Taichung with help from the government, Lin said “the company has been working hard on the project, but no solution has been found.”

Lu maintained his “positive” view on Largan, but expected the company’s second-quarter sales to decline by between 2 percent and 4 percent quarter-on-quarter on another 5 percent to 10 percent quarter-on-quarter drop in sales of iPhone lens modules.

Largan shares have declined 11.57 percent so far this year, closing down 2.57 percent at NT$688 yesterday in Taipei trading.