Largan shares rise on Samsung speculation

Optimism over Largan's sales and bottom line rose after the launch of Samsung's new flagship smartphone model — the Galaxy S IV — in New York on Thursday, they said.

As of 11:34 a.m., shares of Largan had added 4.30 percent to NT$777.00 (US$26.16), with 1.62 million shares changing hands. The benchmark weighted index on the Taiwan Stock Exchange was up 0.30 percent at 7,975.80.

“The move by Samsung to unveil the Galaxy S IV has reignited enthusiasm for Largan, with many investors believing the Taiwanese company has received orders from the South Korean buyer,” said Horizon Securities analyst Benson Huang.

At an investor conference in late January, Largan said the company had received orders from South Korea but would not disclose any details about specific clients. “The market has high hopes that Samsung is Largan's new client,” Huang said. “With the presence of Samsung, Largan's client portfolio has been broadened, which could reduce market concerns over slower shipments of the iPhone 5 sold by Apple Inc., which is another of the company's major clients.” Equipped with advanced technology, such as motion-detection devices and a 13-megapixel camera lens, the Galaxy S IV is likely to continue the momentum created by its predecessor, the Galaxy S III, in attracting consumers to the brand, Huang said.

Some analysts have forecast Samsung's smartphone sales for 2013 to grow 40 percent from 2012, compared with a 20- to 30-percent sales increase forecast for the entire sector.

“As the new Samsung gadget will hit the market in the second quarter, Largan's sales will pick up accordingly, which could prompt investors to leave behind the company's cautious sales outlook for the first quarter, a traditionally slow season in the industry,” Huang said.

In addition, Huang said, China remains one of Largan's major customers because of the growing mainland smartphone market, and Apple is expected to introduce a new version of the iPhone later this year.

“My brokerage expects Largan's consolidated sales in 2013 to range between NT$29.2 billion and NT$30 billion, up from about NT$20 billion in 2012,” Huang said. “It is a big leap.”

On the back of rising sales, Huang said, Largan is likely to post NT$59 in earnings per share in 2013, up from NT$41.58 registered a year earlier.

Huang said that based on the 2013 EPS forecast, shares of Largan could rise further but could also face stiff technical resistance as the stock moves closer to the NT$840-NT$850 range.

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