HSBC Securities and Citigroup Global Markets said yesterday they remained optimistic about Largan Precision Co Ltd’s (大立光) prospects in the face of rising global demand.
Largan, the world’s largest cellphone camera lens supplier, suffered NT$310 million (US$10.5 million) in foreign-exchange losses in the fourth quarter of last year due to a stronger NT dollar. HSBC said the losses were in line with market expectations.
Largan announced on Wednesday that net profit for the fourth quarter fell 10 percent sequentially to NT$1.1 billion, or earnings per share (EPS) of NT$8.29, despite a 12 percent rise in sales to a record NT$3.88 billion.
For the full year, Largan posted a net profit of NT$4.05 billion, up 63 percent from 2009, while sales during the same period rose 51 percent to NT$12.35 billion.
HSBC said sales of camera lenses this year are expected to be boosted by rising demand for smartphones, tablet computers and Apple’s iPhone. On expectations that Largan’s EPS would rise to NT$8.62 this year, HSBC has an “add” recommendation on the stock and raised its price target to NT$920 from NT$820.
Citigroup, meanwhile, said that while the market might react negatively to Largan’s forex losses, the company’s production expansion was expected to lift its sales amid rising global demand, which could alleviate the impact from forex losses.
Citigroup said it expected Largan’s sales this year to grow more than 50 percent from a year earlier and that gross margins and operating income would be stable. It maintained a “buy” rating on Largan, with a target price of NT$869.
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