Shares of camera lens supplier Largan Precision Co (大立光) closed flat at NT$2,585 in the local bourse yesterday, reflecting the market’s mixed reactions to the company’s record-high earnings last quarter.
Largan, which supplies camera lenses for Apple Inc’s iPhone models, on Thursday posted net profits of NT$8.2 billion (US$252 million) for the July to September period, up 55.3 percent year-on-year and 70.12 percent quarter-on-quarter.
The Taichung-based company attributed the increase mainly to foreign exchange gains valued at more than NT$1.7 billion. The results beat the market’s consensus estimate of NT$6.63 billion by 24 percent.
“Without the one-off item of currency gains, the result would have been largely in line with the market’s expectation,” JPMorgan Securities Ltd analyst Narci Chang (張恆) said in a client note released on Thursday.
The company’s stock price has dropped by 30 percent in the past three months, mainly due to the market’s concerns over its market-share loss to other peers for the new iPhones amid fierce pricing competition.
Largan has potential competition from Chinese rivals, including Sunny Optical Technology Group Co (舜宇光學), Taiwan’s Genius Electronic Optical Co (玉晶光) and Japan-based Kantatsu Co, analysts said.
Largan’s chief executive officer Adam Lin (林恩平) denied the speculation during a teleconference on Thursday, saying that “I do not see any changes in Largan’s order allocation from major clients.”
Lin admitted to intense pricing competition, but added that the size of a firm’s market share hinges on its capability.
Daiwa Capital Markets and Mascquarie Securities Ltd said that their research on the market suggests that Largan’s leading position in Apple’s business remains unchanged, due to the firm’s high yield rate performance.
“We believe that both Kantatsu and Genius might find it more difficult to achieve Apple’s quality requirement in iPhone 6S and the next generation of iPhone,” Macquarie analyst Tammy Lai said in a report.
However, UBS Securities Pte Ltd held a more conservative view.
“Although Largan’s market share remains stable for now, it will be difficult for the company to keep up the same strong growth momentum as its Chinese rival Sunny Optical, given Largan’s large base,” UBS analyst Arthur Hsieh (謝宗文) said in a report on Thursday.
Overall, most market analysts forecast that Largan’s sales this quarter could grow from last quarter’s NT$16.08 billion and reach a peak by the end the year, thanks to growing shipments of iPhones.
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