Taipei--Shares of smartphone camera lens supplier Largan Precision Co. (???) moved sharply higher in the mid-morning session Friday after the company on Thursday reported a record high gross margin for the first quarter of the year, dealers said.
The gains by Largan shares contrasted with the fall of contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???), which gave cautious second-quarter guidance at an investor conference Thursday, dealers said.
Although Largan, the most expensive stock on the Taiwan market, gave some support to the broader market, the main board was affected by rising geopolitical tensions after the United States dropped a powerful non-nuclear bomb on Afghanistan, dealers said.
As of 10:52 a.m., shares of Largan, an Apple supplier, had soared 8.16 percent to NT$4,770.00 (US$157), with 817,000 shares changing hands.
Shares of TSMC, the most heavily weighted stock on the main board, had fallen 1.57 percent to NT$188.50 on trading volume of 13.71 million shares.
The weighted index on the Taiwan Stock Exchange was down 85.41 points, or 0.87 percent, at 9,751.27 points.
"Largan's high gross margin beat market expectations," Taishin Securities Investment Advisory analyst Tony Huang said. "That's why many investors who sold the stock yesterday before the investor conference rushed to pick it up soon after the local equity market opened today."
The company posted a record high gross margin of 70.9 percent for the January to March period, up from 70.72 percent seen a quarter earlier, although it reported a 42 percent sequential fall in net profit due to the effects of the slow season and a stronger Taiwan dollar.
"The gross margin showed that Largan has no competition in the market, Huang said." Its fundamentals are really good."
Largan's first-quarter net profit was NT$4.88 billion, down from NT$8.46 billion a quarter earlier after the company reported NT$1.14 billion in foreign exchange losses. But the first quarter figure was up 35 percent year-on-year.
Meanwhile, TSMC faced selling pressure after it forecast an 8-9 percent quarterly decline in consolidated sales in the second quarter to between NT$213 billion and NT$216 billion.
The company reported a 10.8 percent quarterly drop in first-quarter sales to NT$233.91 billion, which missed its target of NT$236 billion to NT$239 billion.
"Both TSMC and Largan were affected by the strength of the Taiwan dollar in the first quarter," Huang said. "Judging from their share prices, I think that investors are paying more attention to TSMC's cautious guidance for the second quarter."
However, TSMC said its operations will make a strong comeback in the third quarter, which is usually a peak season for the semiconductor industry.
"I'll buy that argument, since TSMC is also a good company," Huang said. "But the movement of its shares and that of the local main board are correlated to the global markets, which have been haunted by worsening geopolitics," Huang said.
Source: Focus Taiwan News Channel