Shares of Largan down despite record high profit in Q2
Central News Agency
2014-07-18 12:01 PM
Taipei, July 18 (CNA) Shares of smartphone camera lens supplier Largan Precision Co. came under pressure Friday morning, extending their losses from a session earlier, although the company reported a record high net profit for the second quarter of the year, dealers said. Many investors preferred to lock in the gains they had built in the stock in recent sessions, hoping that Largan will report bottom line growth for the past quarter, they said. However, the market remained upbeat about the company's earnings prospects for the second half of this year, when Apple Inc. will launch its new iPhone model, which is expected to boost the Taiwanese firm's shipments, dealers said. Largan has been dubbed one of the "Apple concept stocks" in the local market as it is part of the U.S. firm's supply chain. As of 11:10 a.m., shares of Largan had dropped 3.95 percent to NT$2,430.00 (US$81) with 1.29 million shares changing hands, extending the 3.98 percent decline seen Thursday. The weighted index on the Taiwan Stock Exchange was down 0.02 percent at 9,410.20 points. "Investors are simply selling on news of Largan's record high of net profit for the second quarter. I think foreign institutional investors have been standing on the sell side of the stock to pocket their gains," Taishin Securities Investment Advisory analyst Tony Huang said. According to the TWSE, foreign institutional investors sold a net 180,598 Largan shares Thursday. At an investor conference Thursday, 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. Largan registered a gross margin of 58.2 percent for the April-June period, the highest in about 30 quarters but lower than an earlier market estimate of 60 percent. "Although the second quarter gross margin was shy of the market forecast, it was significant that Largan maintained such a high profit margin," Huang said. Market analysts said the improvement in Largan's gross margin reflected the company's efforts to add high-end devices to its product portfolio. Citing the orders it has received, Largan has forecast a monthly increase in its July sales. The company said its revenue in June hit a record high and its performance could continue to soar into August. "I think the upbeat outlook for the third quarter took into account an increase in orders from Apple," Huang said. In a research note, Deutsche Securities forecast that Largan will see a 15 percent sequential increase in consolidated sales as the company benefits from orders not only from Apple but also from other smartphone vendors such as China-based Xiaomi Corp. The brokerage projected that Largan could post NT$136 in EPS for 2014, compared with NT$71.64 in 2013. "After the analysts' rosy outlook for Largan, investors are now waiting for the real numbers," Huang said. (By Han Ting-ting and Frances Huang)
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