Taipei, Shares of Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., moved sharply higher Monday despite a decline in sales in June, as investors embraced hopes of a better performance in the third quarter, which is a peak season for iPhone sales, dealers said.
Largan shares attracted buying soon after the equity market opened and maintained their momentum throughout the trading session, stabilizing the broader market, dealers said.
Shares of Largan, the most expensive stock on the local market, closed up 4.18 percent at NT$4,115.00 (US$131.98), with 896,000 shares changing hands. On the main board, the benchmark weighted index ended down 0.32 percent at 10,751.22 points.
"Looking at Largan's gains today, I think many investors shrugged off its poor June sales data, since it was already expected," Dayu International Investment Consultant analyst Chang Chih-cheng said.
In a statement Friday, Largan reported NT$4.076 billion in consolidated sales for June, down 19 percent from the previous month and 10 percent from a year earlier. The sales decline followed a drop in orders from Chinese smartphone brand Huawei Technologies Co., one of Largan's major clients, due to a series of trade disputes between the United States and China.
"Today, investors seized on the expected sales peak in the third quarter as a reason to pick up Largan shares, which had been hammered recently by worry over global demand amid U.S.-China trade frictions," Chang said.
In June, 20 mega-pixel lenses and higher, which command a higher profit margin, accounted for 20-30 percent of Largan's total sales, while 10-20 mega-pixel lenses made up 50-60 percent, and 8 mega-pixel lenses represented 10-20 percent, the company said.
The company's second-quarter consolidated sales showed a 15 percent increase from a year earlier and a 43 percent rise from the previous quarter to NT$14.08 billion.
In the first half of the year, Largan said, its consolidated sales rose 13 percent from a year earlier to NT$23.90 billion.
Largan CEO Adam Lin said in the statement that the company's July sales are expected to be higher than in June because clients have started building their inventories, placing more orders for Largan's camera lenses, in preparation for rising demand in the third quarter.
While Lin did not comment on sales for the entire third quarter, he said Largan is expected to be at full production in the second half of this year, even as it is working to expand capacity. Apple, which accounts for about 40 percent of Largan's sales, is expected to unveil its new iPhone models in September.
Largan is scheduled to release its second quarter results and give guidance for the third quarter at an investor conference on Thursday.
Source: Focus Taiwan News Channel