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May 29, 2017

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Shares of Largan up on record-high sales in May

TAIPEI -- Shares of Largan Precision Co. (大立光) moved higher Friday morning, a day after the smartphone camera lens supplier reported record high sales in May, dealers said.

The buying was also influenced by Hong Kong-based CIMB Securities, which raised its target price on Largan shares after the impressive May sales data report, dealers said.

They said investors are hoping that foreign institutional investors will continue to increase their holdings in the stock.

As of 11:08 a.m., shares of Largan had climbed 2.27 percent to NT$2,030.00 (US$67.67), with 573,000 shares changing hands. The weighted index on the Taiwan Stock Exchange was up 0.03 percent at 9,143.04 points.

"Largan has been benefiting from the efforts of Android smartphone vendors to boost shipments by launching new models, although its main client Apple Inc. has not yet unveiled the next generation iPhone," said Andy Hsu, an analyst with Ta Ching Securities.

"In particular, orders from Chinese smartphone vendors who are gearing up to sell lower cost models helped drive Largan's sales growth in May," Hsu said.

Largan has been dubbed one of the "Apple concept stocks" in the local market as the U.S. consumer electronics giant accounts for about 40 percent of its total sales.

On Thursday, Largan said that it posted NT$3.39 billion in consolidated sales for May, up 6 percent from the previous month and 73 percent from a year earlier. It was the second consecutive month that Largan reported record high monthly sales.

Dual-lens Smartphones

The company said that although the slow season for the smartphone camera lens industry has continued into the second quarter, many of its customers are stepping up efforts to equip their smartphones with dual lenses, which raised demand for camera lenses in May.

It said 10-megapixel lenses and above accounted for 10-20 percent of its total sales in May, with 8-megapixel lenses making up 30-40 percent, and 5-megapixel lenses 30-40 percent.

Citing continued solid demand, Largan forecast that its consolidated sales for June will remain as high as in May, a projection that Hsu backed.

"Judging from Largan's current order backlog, the company may post about NT$10 billion in consolidated sales for the second quarter," Hsu said.

In the first quarter, Largan's consolidated sales stood at NT$6.86 billion.

"I expect Largan will report NT$27-NT$30 in earnings per share for the April-June period," compared with NT$22.36 in the first quarter, Hsu said.

In a research note, CIMB Securities raised its target price on Largan shares from NT$2,450 to NT$2,650, the highest level among the foreign brokerages that track the stock.

The optimism reflected expectations that Largan will continue to set new sales records in the second half of the year after Apple unveils its new iPhone, Hsu said.

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