Largan August sales hit 7-month high

Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., reported Sunday that its sales hit a seven-month high in August, which analysts attributed to the efforts by the company's clients to build inventories before the launch of new products.

In a statement, Largan said it posted NT$4.012 billion (US$145 million) in consolidated sales in August, up 5.49 percent from a month earlier and the highest since January, when its revenue was NT$4.61 billion.

The August figure, however, was 20.29 percent lower than a year earlier, which according to analysts was due mainly to a loss of orders from Huawei Technologies Co. after the Chinese company was hit by United States' sanctions, effective in mid-September 2020.

In the first eight months of 2021, Largan's consolidated sales totaled NT$29.75 billion, down 16.28 percent from a year earlier, largely on the back of trade tensions between the U.S. and China that led to the sanctions against Huawei.

In August, lenses 20 megapixels and over, which have a higher profit margin, accounted for 10-20 percent of Largan's total sales, according to the statement.

Those 10-20 megapixels accounted for 40-50 percent of the company's sales, and 8-10 megapixel lenses made up 10 percent, while other products such as voice coil motors contributed 30-40 percent, the statement showed.

The August sales were in line with the guidance given by Largan CEO Adam Lin (???), who had projected a monthly sales increase in August and September.

Lin said, however, that the smartphone lens industry remained haunted by a shortage of raw materials, which would compromise shipment growth. He anticipated that low-end smartphone lenses would dominate the market in the third quarter.

At an annual general meeting in late August, Largan's shareholders approved a proposal to allow the company to issue dividends twice a year instead of once.

According to analysts, that decision was made in a bid to encourage investors, in particular foreign institutional investors, life insurance companies and other institutions, to hold onto the company's shares for longer periods of time.

Last week, Largan issued NT$91.5 in cash dividend per share on its 2020 earnings per share, which stood at NT$182.90. The cash dividend per share translated into a payout ratio of 50.03 percent, marking the first time in seven years the company had proposed a payout ratio of more than 50 percent.

In addition, Largan has decided to set up a subsidiary, at a cost of NT$1 billion, to raise its efforts to tap into the booming automotive electronics market.

Source: Focus Taiwan News Channel