Shares of Largan higher on earnings outlook, but gains capped

Taipei, May 21 (CNA) Shares of Largan Precision Co. continued to move higher Tuesday amid ongoing speculation that the company has secured orders from non-Apple Inc. buyers, such as Samsung Electronics Co., dealers said. The stock has scored significant gains in recent sessions to approach the NT$1,000 (US$33.44) mark after reporting better-than-expected first quarter results on April 25. The rise continued Tuesday, but technical resistance started to kick in to limit the gains, they said. As of 12:19 p.m., shares of Largan had added 4.23 percent to NT$985.00, off an early high of NT$996.00, with 1.38 million shares changing hands. The weighted index on the Taiwan Stock Exchange was down 0.02 percent at 8,375.51. "Optimism over Largan's bottom line continued to push the stock higher," Grand Fortune Securities analyst Chen Wei-tai said. "Many investors have high hopes that orders placed by non-Apple customers will offset the impact of the U.S. consumer electronics giant's slowing sales." Largan has long been part of Apple's global supply chain. While the U.S. company remains Largan's largest client, the camera lens specialist has reportedly taken steps to diversify its customer portfolio. There has been speculation that Largan's technology has been certified by Samsung Electronics, enabling it to obtain orders for the camera lens for Samsung's flagship smartphone, the Galaxy S4, and tablet, the Galaxy Note3. "In addition to Samsung, Taiwan-based smartphone vendor HTC is another of Largan's important customers. So I expect that even though Apple will not launch new products in the second quarter, Largan should benefit from orders from other major global mobile device players," Chen said. "Once Apple launches new models in the second half of this year, Largan is expected to report significant growth in its earnings then," Chen said. Chen said his brokerage expects Largan to post earnings per share of NT$58-60 for 2013 as a whole, up from NT$41.58 last year. It may even raise its EPS estimate later in the year if Apple's new products are a hit with consumers, he added. Largan reported EPS of NT$13.79 in the first quarter, beating foreign institutional investors' expectations of NT$12-NT$13. The company's shares have risen almost 40 percent since the results were announced, making Largan the most expensive stock on Taiwan's stock exchange. But the momentum may be shifting, Chen said. "Because the stock has made a strong showing in recent sessions, there have been signs that some foreign institutional investors are starting to lock in the gains they built up despite the upbeat mood about Largan's earnings prospects," he said. According to the Taiwan stock exchange, foreign institutional investors have sold a net 321,615 Largan shares in the past two sessions. "There have been high technical hurdles ahead of NT$1,000 mark so investors should keep alert for the moment while trading the stock," Chen said. (By Han Ting-ting and Frances Huang)