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June 28, 2017

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Target prices on Largan shares increased to more than NT$3,000

TAIPEI -- Several foreign brokerages have raised their target prices on shares of Largan Precision Co. (大立光) to more than NT$3,000 (US$100) after the Taiwan-based smartphone camera lens supplier reported a new high in net profit for the second quarter of this year.

The upbeat foreign brokerages have expressed optimism toward Largan's earnings outlook for the second half of this year, when Apple Inc. will launch the next generation iPhone, a move expected to boost the Taiwanese supplier's shipments.

Macquarie Securities, one of the brokerages, has issued a target price of NT$3,120 on Largan shares, an upward revision from the previous NT$2,460. The Macquarie Securities target price has been the highest so far among the foreign brokerages that track the stock.

The brokerage has maintained an "outperform" recommendation on the stock.

On Friday, shares of Largan fell 5.93 percent to close at NT$2,380.00 on the Taiwan Stock Exchange as investors rushed to lock in recent significant gains in the stock.

In the April-June period, Largan posted NT$3.72 billion in net profit, up 24 percent from about NT$3 billion the previous quarter. Its second-quarter earnings per share (EPS) stood at NT$27.75, compared with NT$22.36 in the first quarter. Its net profit and EPS were the highest in its history.

In the second quarter, when Largan's sales grew month by month, the company's consolidated sales also hit an all-time high of NT$9.98 billion.

Largan Chief Executive Officer Adam Lin said that the company is expected to see its sales for July grow from June, and forecast that the August figure could beat July's, based on orders received.

Echoing Lin's forecast, Macquarie said that as Largan will be the largest camera lens supplier for the new iPhone, its consolidated sales for the third quarter could rise 12 percent from the second quarter, and the fourth quarter sales are likely to grow at a more significant pace of 39 percent.

After taking account into the second-quarter results and optimism toward Largan's earnings prospects, the brokerage has raised its forecast of the smartphone camera lens maker's EPS for 2014, 2015 and 2016 by 2 percent, 6 percent and 2 percent, respectively, to NT$129.3, NT$155.91 and NT$180.24.

Holding a similar optimistic attitude toward Largan, Daiwa Securities has raised its target price on the manufacturer' shares to NT$3,060 from NT$2,560, leaving a "buy" recommendation unchanged, while UBS Securities has raised a target price on the stock to NT$3,050 from NT$3,000 and has maintained an "overweight" rating.

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