Largan shares affected by unclear outlook despite Q3 earnings

2017/10/13 11:52:10 fontsize-small fontsize-default fontsize-big
Largan shares affected by unclear outlook despite Q3 earnings

Taipei, Oct. 13 (CNA) Shares of Largan Precision Co. (大立光), a Taiwan-based smartphone camera lens supplier, moved lower Friday on concerns over its November shipments despite a 60 percent sequential increase in third quarter net profit, dealers said.

As Largan is one of Apple Inc.'s most important suppliers, its downturn affected investor sentiment toward other local "Apple concept stocks," which prevented the broader market from continuing to rise after a strong showing in previous sessions, they said.

As of 11:04 a.m., shares of Largan had fallen 0.71 percent to NT$5,595.00 (US$185), with 495,000 shares changing hands, though they were up from an early low of NT$5,495.00.

The weighted index on the Taiwan Stock Exchange was down 0.14 percent at 10,696.49.

Among other Taiwanese suppliers to Apple, iPhone assembler Hon Hai Precision Industry Co. (鴻海) had lost 0.46 percent to NT$107.50 and contract chipmaker Taiwan Semiconductor Manufacturing Co. (台積電) had dropped 0.84 percent to NT$235.50.

"The current selling in Largan reflected lingering fears that shipments of Apple's premier iPhone X will be delayed after Largan said on Thursday it remains unclear about its sales outlook for November," KGI Securities analyst Phil Chu said.

Chu said such concerns over shipment delays echoed recent market speculation that iPhone X production has encountered some technology problems and even a shortage of certain components.

"So investors simply ignored Largan's third quarter results and punished the stock soon after the stock market opened," Chu said.

At an investor conference held Thursday, Largan said that while it has taken more orders for October than September, uncertainty over November remained in place, which prompted investors to play down peak season effects for the fourth quarter.

Also at the investor conference, Largan announced that its net profit for the July-September rose 64.81 percent from a quarter earlier to NT$7.77 billion, with earnings per share at NT$57.93 after posting EPS of NT$35.14 in the second quarter.

It had third quarter consolidated sales of NT$14.92 billion, up 32 percent from a year earlier, while its gross margin for the three-month period rose 1.2 percentage points from a year earlier to 67.93 percent.

"The third quarter results came in line with market expectations," Chu said. "So investors just focused on uncertainty over the fourth quarter today, dumping Largan shares."

In the first nine months of this year, Largan posted NT$17.37 billion in net profit, up 22 percent from a year earlier, with EPS at NT$129.48.

"The current selling in Largan shares does not bother me very much since it is possible the company and other Apple suppliers could see a great first quarter of next year due to deferred orders," Chu said.

After the fall in its share price on Friday, Largan could find some short-term technical support at around NT$5,460, Chu said.

(By Tien Yu-pin and Frances Huang)
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