Largan shares surge despite looming ex-dividend date
By Ted Chen, The China PostTAIPEI, Taiwan -- Largan shares surged dramatically throughout yesterday's session, as it reached the eve of its ex-dividend date, indicating investor anticipation about the company's generous dividend payout, and future prospects.
August 23, 2013, 12:01 am TWN
Largan shares yesterday saw languid activity throughout the session, however trading volume surged markedly in the last half hour before the bell. Largan shares closed at NT$1,030, gaining NT$25, or 2.37 percent, absent of any signs of the typical downward pressure on share price commonly seen as a stock approaches its dividend payout date. Market commentators stated that investor behavior indicates an upbeat outlook for the company's future performance, with most choosing to hold positions on Largan, while anticipating a speedy recovery from an anticipated share price drop as the company pays out dividends today.
Shares prices often drop in proportion to the amount of dividend payment announced by companies due to the effect of related tax obligations on dividend income for shareholders.
Foreign institutional investors remarked that the camera module maker is poised to enter its high season, and expect performance to grow markedly. Largan shares have received upgraded ratings from several foreign institutional investors, with target prices set at NT$1,390, and NT$1,300 by Merrill Lynch and J.P. Morgan respectively.
Largan, listed among Apple's major suppliers, is expected to see a surge in its August revenues, ahead of Apple's launching of several high-profile products later this year, according to foreign institutional investors.
Merrill Lynch stated that following a period of inventory adjustment throughout June and July, the company is ready to supply the ever-increasing demand for high-tier mobile device camera modules. Analysts also expect Largan to benefit from its lead in high yield rate and production capacity of the widely adopted 8-megapixel camera modules.
The 8-megapixel camera modules were previously only equipped on high-end handsets, however, its proliferation has seen adoption by numerous mid-tier models made by Chinese smartphone makers, analysts said.
Revenues derived from the purchases of 8-megapixel camera modules from China-based clients is expected to rise from 10 percent to 14 percent of overall sales this year, and contribute considerably to net earnings, analysts said.