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June 30, 2017

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Largan shares boosted by record-high dividend proposal

TAIPEI--Shares of smartphone camera lens supplier Largan Precision Co. (大立光) got a boost Wednesday after the company proposed a day earlier the issuance of a record-high cash dividend for 2013, dealers said.

Many investors also have high hopes that Largan's bottom line will be further strengthened in 2014 on expectations that smartphone brands, in particular Apple Inc., will unveil new models to attract consumers, the dealers said.

In addition, buying was sparked by a move by Barclays Capital to raise a target price to NT$1,700 (US$56.11) from NT$1,360 on Largan shares amid optimism toward the company's earnings prospects, they added.

Shares of Largan added 2.91 percent to close at NT$1,415, with 1.28 million shares changing hands. The weighted index on the Taiwan Stock Exchange ended down 0.48 percent at 8,689.46 points.

The stock opened sharply higher in the wake of the dividend proposal and momentum continued to push the share price back to the NT$1,400 mark to keep the title of the most expensive stock in the local market, the dealers said.

In a statement released that day, Largan said a board meeting proposed to give NT$28.5 in cash dividend for 2013, up from NT$17.0 recorded in the previous year. The latest dividend payout, if approved by shareholders in an annual general meeting scheduled for June 18, will be the highest in the company's history.

The dividend proposal came after Largan posted a record high of NT$71.64 in earnings per share (EPS) last year as the company took the lead over its peers in production technology, which helped to secure more orders.

However, based on the 2013 EPS, the dividend payout ratio stood at only 39.8 percent, lower than 40.9 percent recorded in 2012, when Largan's EPS was NT$41.58. Largan said the lower dividend payout ratio reflected the need for the company to keep more cash on hand for future expansion.

With its earnings on the rise, Largan has also proposed to dole out NT$1.732 billion in bonuses to its employees, up 72.7 percent from a year earlier. The average bonuses for Largan's employees will hit NT$600,000.

In February, Largan's consolidated sales fell 34.06 percent from January due to the reduced number of working days in the month, when the Lunar New Year holiday was celebrated. Analysts said it is possible that the company will see its sales momentum pick up in March as the number of working days returned to normal.

They said Largan is expected to continue to benefit from Apple's new version of the iPhone, which is likely to be unveiled in the middle of 2014, which will further boost its earnings for the rest of the year.

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