Taipei--Shares of Taiwan-based Largan Precision Co. (???), a smartphone camera supplier to Apple Inc., closed at a new record high Thursday, the first trading session after the Lunar New Year holiday after the U.S. consumer electronics giant reported better-than-expected results for the October-December period, dealers said.
Buying in Largan also reflected optimism toward its bottom line, which could be bolstered by an increase in the adoption of dual camera lenses by international smartphone brands. This lent support to the broader market and kept the index from falling further during Thursday's session, the dealers said.
Shares of Largan closed up 2.25 percent to close at NT$4,450.00 (US$143), with 1.11 million shares changing hands on the Taiwan Stock Exchange. The weighted index ended down 0.20 percent at 9,428.97 points. The stock remained the most expensive one in the local market.
Largan shares hit NT$4,580.00 at one point in the early part of the session, which was an intraday high for the stock, in a knee-jerk reaction to a 6.10 percent increase enjoyed by Apple shares on Wall Street overnight after the U.S. firm reported US$3.36 in earnings per share (EPS) for the fourth quarter of last year, beating an earlier market estimate of NT$3.22.
The intraday high in its share price boosted Largan's market capitalization to more than NT$610 billion at one point to make it the fifth-largest listed company in the local equity market in terms of market cap.
"Apple's results served as a catalyst to the gains posted by Largan, which is among the most important suppliers to the iPhone vendor," Ta Ching Securities analyst Andy Hsu said. "As one of the favorites of foreign institutional investors, Largan is expected to ride the wave of foreign fund inflows to move higher and further."
Apple, which accounts for about 40 percent of Largan's total sales, sold 78.30 million iPhones during the three-month period, up 5 percent from a year earlier, to boost its total sales by 3.3 percent year-on-year. iPhones made up 69.4 percent of Apple's revenue in the fourth quarter.
"Thanks to Largan's upturn, the local main board did not fall too much Thursday, although investors rushed to lock in their earlier gains to push down the broader market by the end of the session," Hsu said.
"It seemed that investors here remain upbeat about Largan's bottom line, which could improve with Apple expected to launch the next iPhone, the iPhone 8, later in the year," Hsu said. "In addition, more and more international smartphone brands, in particular Chinese ones, have adopted dual camera lenses, and Largan will no doubt benefit from this trend."
Hsu said that the market has widely anticipated that Largan will post NT$230-NT$250 in EPS for 2017, up from NT$169.40 recorded in 2016.
The analyst said that as long as foreign institutional investors continue to buy into Largan, there will be little technical resistance for the stock.
Source: Focus Taiwan News Channel