Information Technology / Taiwan 3008 TT Information Technology / Taiwan 2 April 2014 Largan Precision Largan Precision Target (TWD): 1,150.00 1,750.00 Upside: 18.2% 3008 TT 1 Apr price (TWD): 1,480.00 Dual engines to drive earnings growth 1 Buy (from Hold) 2 Outperform • We expect Largan to land the lion’s share of iPhone 6 lens- 3 Hold module orders, for which it should see a 20-30% ASP premium 4 Underperform • We forecast China brands to contribute 30-35% of Largan’s 5 Sell revenue in 2014, up from 20% in 2013 • Upgrading to Buy (1), from Hold (3); raising target price to TWD1,750 for potential upside of 18.2% How do we justify our view? China brands: rising volumes because we are more positive on and ASPs. China brands are Largan’s prospects of winning Apple upgrading their smartphone cameras orders and its revenue from China this year, which should lead to higher brands. ASPs for Largan. We also expect Forecast revisions (%) Kylie Huang Largan to increase its share of such Year to 31 Dec 14E 15E 16E (886) 2 8758 6248 orders given its leading position in Revenue change 3.3 10.4 n.a.
[email protected] high-end lens modules, and forecast Net profit change 10.0 18.9 n.a. Core EPS (FD) change 10.0 18.9 n.a. China brands to contribute 30-35% Jason Chen Source: Daiwa forecasts (886) 2 8758 6251 of its revenue in 2014 (20% in 2013).
[email protected] Spec upgrades should continue.