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Largan shares dive on target price cut; TAIEX below 9,000 points

Largan shares dive on target price cut; TAIEX below 9,000 points

Taipei, Sept. 12 (CNA) Shares of Largan Precision Co. took a beating in the morning session Monday, extending losses from Saturday, after an Asian brokerage lowered a target price on the stock and urged investors to cut their holdings in the Taiwanese smartphone camera lens supplier, dealers said.

Led by Largan and other large-cap stocks, the local main board continued to move lower amid lingering worries over an interest rate hike by the U.S. Federal Reserve, with the weighted index falling below the 9,000 point mark in the morning session, they said

As of 11:02 a.m., shares of Largan, one of the major Taiwanese suppliers to Apple Inc., had fallen 3.62 percent to NT$3,325.00 (US$105) with 684,000 shares changing hands on the Taiwan Stock Exchange, where the weighted index was down 0.90 percent at 8,972.26 points.

"The latest research note by the foreign brokerage triggered heavy selling in Largan shares soon after the local equity market opened. Investors simply used the research note as a cause to lock in the gains they had built from Largan in recent sessions," MasterLink Securities Tom Tang said.

According to the research note, the Asian brokerage issued an "underperform" rating on Largan shares and cut a target price on the stock to NT$2,600, the lowest among the foreign brokerages which track the smartphone camera lens marker. The target price indicated that the stock still has room to trend lower by more than 20 percent.

The foreign brokerage said that a recent strong showing made by Largan shares resulted from an upbeat mood about the adoption of duel camera lenses by international smartphone brands, adding that such positive leads had been largely factored into the stock's price.

"I agree with the comments from the foreign brokerage," Tang said. "More important, after the launch of Apple's iPhone 7 and iPhone 7 Plus, concerns over the sales of the latest iPhones have imposed an impact on Taiwan's Apple concept stocks, including Largan," Tang said, "It was no surprise that Largan faced continued downward pressure today.

On Saturday, Largan shares closed down 4.30 percent. Taiwan was the only market equity investors could trade in on Saturday in a bid to make up for a lost trading session during the 4-day Mid-Autumn Festival holiday later this week.

In August, Largan posted NT$4.82 billion in consolidated sales, up 6 percent from a month earlier but down 9 percent from a year earlier. Its August sales hit a nine-month high with the market attributing the upswing to the launch of the new iPhones.

Tang said that the plunge in Largent's shares and the huge losses suffered by other market heavyweights such as Taiwan Semiconductor Manufacturing Co. (TSMC) pushed the broader market to fall sharply in the morning session. TSMC, the most heavily weighted stock in the local market, had shed 1.69 percent to NT$175.00 as of 11:02 a.m.

"I suspect that foreign institutional investors remain on the sidelines for the moment as fears over a rate increase by the Fed have been on the rise. After the losses on Saturday and today, the local main board market has become technically fragile," Tang said.

"Whether the local equity market will stop such a downtrend will be up to how foreign institutional investors trade," Tang said. "But, amid the current weak market sentiment caused by liquidity tightening worries, foreign investors are likely to dump more stocks here." (By Han Ting-ting and Frances Huang)

Updated : 2021-05-12 03:59 GMT+08:00