PDF 原檔：報告_UBS_大立光3008_20260906_original.pdf
原始內容
Largan Precision
Strong CPO ramp priced ahead of qualification
The re-rating has outpaced qualification progress; downgrade from Buy to Sell
Largan shares have risen 242% since April on optimism around its CPO FAU progress. While we stay constructive on Largan's CPO prospects, we believe the market is pricing in confidence ahead of still-early qualification progress, particularly given a crowded competitive field. Largan only starts its sample line late Q3, integrating its Prism Micro Lens Array and Fiber Array with AOET's V-groove and Corning's fiber. We expect several quarters to improve yields, gain integrator acceptance (Corning, Senko, AuthenX) and convert its initial production-oriented FA program into volume while competing against incumbent TFC and vertically integrated rivals incl. Coherent. We downgrade our rating from Buy to Sell with CPO still at an early stage and the stock now 35x 2027 vs. LT 1318x range well above our sum-of-the-parts NT$5,000 PT based on 15x smartphone lens + 50x CPO base case for 40% share (upper end of optical peers at 14-72x).
Still a range of outcomes for CPO solution traction
Largan's approach pairs V-groove with PMLA to shape the optical light from the PIC into the fiber at high accuracy with automated assembly. Feedback is positive on Largan's precision and track record for volume production/yield improvement (now still low) and 1 FA design in an FAU. A risk is Largan targeting the Gen 3 optics should take until 2028 and also competes with incumbent TFC which is already designed-in for 2026-27 and other FAU vendors like Coherent that can vertically integrate or use meta lens not requiring Largan's initial V-groove approach. Largan's push toward a complete solution may also conflict with integration partners.
Core smartphone lens tracking behind amid memory headwinds
We also see risk on near-term results with Q326 sales tracking light. Aug sales were NT $5bn, +3% MoM, -16% YoY, taking QTD revenue to NT$10.1bn, 53% of UBSe/Street Q326. Sept would need to grow +73% MoM to meet UBSe/Street +36-38% QoQ vs. normal seasonal +8% MoM. We expect flattish builds at best for its flagship customer (80% of sales) needing to raise price to pass on memory costs +US$200-300 YoY albeit some support from high-end introducing variable-aperture lens, while foldable lens specs remain similar. Factoring muted smartphone growth but healthy margins, we view a mid-teens multiple appropriate for this business, in line with its historical range.
Stock prices in our upside case ahead of traction; risk-reward skews negative
We maintain basic '26E/27E EPS at NT$190/NT$214 and NT$5,000 SOTP PT based on 1) 15x smartphone lens (NT$3,270) + 2) 50x CPO base case EPS of NT$35 for NT$1,730 (40% share, 100k switches/7.2mn FAUs, US$150/FAU, US$1.1bn TAM), high-end of peers due to its premium ~40-45% OpM. We view risk/reward skewed negative with downside to NT$2,500 on limited CPO success and softer smartphones, base case NT $5,000 for CPO traction, and upside 22% if the stock is bid to our upside case NT$9,000 based on top-end 70x P/E on CPO earnings at 60% share of a higher US$1.58bn TAM.
| Highlights (NT$m) | 12/23 | 12/24 | 12/25 | 12/26E | 12/27E | 12/28E | 12/29E | 12/30E |
|---|---|---|---|---|---|---|---|---|
| Revenues | 48,842 | 59,458 | 61,148 | 67,869 | 77,189 | 83,044 | 88,315 | 93,870 |
| EBIT (UBS) | 17,807 | 24,033 | 23,558 | 25,937 | 29,796 | 34,945 | 35,215 | 37,516 |
| Net earnings (UBS) | 18,047 | 22,480 | 23,613 | 24,642 | 28,019 | 32,818 | 33,151 | 35,174 |
| EPS (UBS, diluted) (NT$) | 135.22 | 168.43 | 176.92 | 188.21 | 214.00 | 250.66 | 253.20 | 268.65 |
| DPS (net) (NT$) | 85.50 | 67.50 | 97.50 | 80.00 | 95.36 | 107.40 | 125.80 | 127.07 |
| Net (debt) / cash | 111,655 | 117,781 | 122,309 | 124,539 | 139,268 | 155,001 | 170,311 | 188,490 |
| Profitability/valuation | 12/23 | 12/24 | 12/25 | 12/26E | 12/27E | 12/28E | 12/29E | 12/30E |
| EBIT (UBS) margin% | 36.5 | 40.4 | 38.5 | 38.2 | 38.6 | 42.1 | 39.9 | 40.0 |
| ROIC (EBIT)% | 39.3 | 46.2 | 40.9 | 42.4 | 47.5 | 54.1 | 52.9 | 56.0 |
| EV/EBITDA (UBS core) x | 7.7 | 7.1 | 6.0 | 23.2 | 19.9 | 17.8 | 17.1 | 15.7 |
| P/E (UBS, diluted) x | 16.2 | 15.1 | 13.3 | 39.3 | 34.6 | 29.5 | 29.2 | 27.5 |
| Equity FCF (UBS) yield% | 2.0 | 4.3 | 3.0 | 3.3 | 2.8 | 3.1 | 3.3 | 3.6 |
| Dividend yield (net)% | 3.9 | 2.7 | 4.1 | 1.1 | 1.3 | 1.5 | 1.7 | 1.7 |
Source: Company accounts, LSEG Eikon, UBS estimates. Metrics marked as (UBS) have had analyst adjustments applied. Valuations: based on an average share price that year, (E): based on a share price of NT$ 7,400.00 on 04-Sep-2026
Equities
Taiwan
Electric Components & Equipment
12-month rating
Sell
Prior : Buy
NT$5,000.00
NT$7,400
12m price target
Price (04 Sep 2026)
RIC:
3008.TW
BBG:
3008 TT
Trading data and key metrics
52-wk range
Market cap.
Shares o/s
Free float
Avg. daily volume ('000)
Avg. daily value (m)
Common s/h equity (12/26E)
P/BV (12/26E)
NT$7,810.00-2,025.00
NT$972b/US$30.7b
131m (ORD)
70%
2,747
NT$13,188.4
NT$197b
4.9x
Net debt to EBITDA (12/26E)
NM
| EPS (UBS, diluted) (NT$) | EPS (UBS, diluted) (NT$) | EPS (UBS, diluted) (NT$) | EPS (UBS, diluted) (NT$) | EPS (UBS, diluted) (NT$) |
|---|---|---|---|---|
| From | To | %ch | Cons. | |
| 12/26E | 185.76 | 188.21 | 1 | 184.63 |
| 12/27E | 214.00 | 214.00 | 0 | 204.05 |
| 12/28E | 250.74 | 250.66 | -0 | 233.00 |
Randy Abrams
Analyst randy.abrams@ubs.com +886-2-8722 7338
Irene Chang
Associate Analyst irene.chang@ubs.com +886-2-8722 7280
Thesis Map UBS Research THESIS MAP a guide to our thinking and what´s where in this report
Pivotal Questions
UBS VIEW
EVIDENCE
What's priced in
Upside/Downside Spectrum
Q: Could Largan's CPO products contribute meaningful revenue in a few years?
We stay constructive but the company still has hurdles to clear in a crowded space. Its scale and track record in high-end smartphone lens gives it an opportunity supplying key components of the CPO FAU assembly, traditional strength in precision lens micro assemblies, alignment accuracy, in-house tooling and automation that could give it a differentiated solution. Our feedback at Semicon Taiwan suggests the company is still early in qualification, with its sample production line for customer evaluation readied in late September and still requiring work with a system integrator and qualification with the fabless customer and ODMs. We still see a year to move from sampling to design-in but if successful timed to meet expected market acceleration in 2028-29.
Q: Will there be further technology upgrades driving the lens cycle in the coming years?
We expect spec upgrades for Largan's core lens business to come in H226 from variable aperture shipments for the iPhone 18 (which Genius does not currently participate though may enter over time, as seen with periscope lenses). Key offset though is weaker sales with Q3 tracking light and suggesting a softer build due to memory headwinds. Further upside could come from broader adoption of 48MP modules in future iPhone models. Looking longer term, Apple is reportedly exploring 200MP periscope lens and adjacent opportunities to penetrate physical AI categories with precision lens including robotics, autonomous systems and AR/VR devices.
We downgrade our rating on Largan from Buy to Sell as we view the market expectations as now pricing in a bullish scenario for strong market traction with the company still at an early stage of qualification, still needing to improve its process and yields, and competing in a crowded space also against an existing incumbent. We expect several quarters to improve current low yields, gain acceptance from solution integrators (Corning, Senko, AuthenX) and secure design-ins by the AI GPU fabless company and its ODM partners against incumbent TFC and other rivals. We downgrade Largan from Buy to Sell with CPO still at an early stage and the stock now 35x 2027 vs. LT 13-18x range and well above our sum-of-the-parts NT$5,000 price target based on 15x smartphone lens + 50x CPO base case for40% share (upper-end of optical peer range of 14-72x).
Largan has demonstrated its samples with partners at Computex and Semicon Taiwan and cited its goals to ramp CPO as its next opportunity. The company is still early in qualifications with a sample automated line in the coming months followed by design-in engagement with system integrators, ODMs and the fabless customer to target design-in on 3rd gen CPO solutions in 2028. For smartphone lens, its top customer had a strong iPhone 17 cycle although acknowledged it would have to raise price to pass on higher memory costs which could dampen growth. Sales QTD are tracking slightly light as Largan also competes with 2nd source Genius. Our supply chain checks and management commentary points to introduction of higher value variable aperture lens in H226.
Largan is currently trading above the high end of its historical range at 39x/35x our 2026E/27E EPS vs. a long-term range of 13-18x forward consensus earning, pricing in success penetrating the CPO component market ahead of the earnings stream which would only start late in 2027 into 2028. We note optical component peers trade at 14-72x with an average of ~38x 2027E P/E (Genius at 25x 2027 P/E). We maintain our SOTP valuation with our price target at NT$5000 based on 1) 15x smartphone lens (NT$3,270) + 2) 50x CPO base case EPS of NT$35 for NT$1,730 (40% share, 100k switches/7.2mn FAUs, US$150/FAU, US$1.1bn TAM), high-end of peers due to its premium ~4045% OpM. We view the stock at NT$7,400 now pricing in CPO traction on a 50x multiple of our upside NT$76 case based on 60% share of an upside US$1.6bn opportunity.
Source: UBS estimates
commentary
Largan shares have risen 242% since 1 April on optimism around its CPO fiber array unit (FAU) progress. While we stay constructive post our feedback at Semicon Taiwan on Largan's ability to develop CPO solutions, we now believe the market is pricing in a level of confidence that has run well ahead of qualification progress which is still early and competing in a crowded field. Largan will only start its sample line in late Q3 integrating its Prism Micro Lens Array and Fiber Array, AOET's V-groove and Corning's glass fiber. From there, we expect several quarters to improve current low yields, gain acceptance from solution integrators (Corning, Senko, AuthenX) and secure design-ins by the AI GPU fabless company and its ODM partners against incumbent TFC and rivals including Coherent with own lens/FAU. The company did note on its Q226 call that it had secured one mass production commitment for its fiber array to an FAU maker that could ramp by H227 although early to conclude the magnitude of this engagement or end customer design-in, with the other customers still at proof-of-concept phase.
We downgrade our rating on Largan from Buy to Sell with CPO still at an early stage and the stock now 35x 2027 vs. LT 13-18x range and well above our sum-of-the-parts NT $5,000 price target based on 15x smartphone lens + 50x CPO base case for 40% share (upper-end of optical component peers trading at a range of 14-72x).
Figure 1: FAUs scale up with switch bandwidth
| CPO Platform Example | Public optical engine data | FAUs per switch | Comment |
|---|---|---|---|
| Broadcom TH5 / Bailly 51.2T | 8 × 6.4T OEs | 16 FAUs | Each optical engine requires 2 FAUs |
| NVIDIA Quantum - X Q3450 115.2T | 72 × 1.6T OEs | 72 FAUs | 4 ASICs, 6 detachable optical subassemblies per ASIC, 3 OEs per subassembly = 72 OEs and FAUs. |
| NVIDIA Spectrum - X SN6810 102.4T | 32 active × 3.2T OEs; 36 incl. redundancy | 32-36 FAUs | 36 OEs per 102.4T package, 32 active. |
| NVIDIA Spectrum - X SN6800 409.6T | 4 × 102.4T packages | 128-144 FAUs | 4 packages × 32 active and 36 total OEs. |
Source: UBS estimates
Still a range of outcomes for CPO solution traction
Largan's approach pairs V-groove with PMLA to shape the optical light from the PIC into the fiber at high accuracy with automated assembly. Feedback is positive on Largan's precision and track record for volume production/yield improvement (now still low). A risk is Largan targeting the Gen 3 optics should take until 2028 and also competes with incumbent TFC which is already designed-in for 2026-27 and other FAU vendors like Coherent that can vertically integrate or use meta lens not requiring Largan's initial Vgroove approach. Largan's business model may also conflict with integration partners as it also attempts to build toward a complete solution.
We estimate Largan's Total Addressable Market in a downside case is US$270mn if it only supplies sub-components into a market that continues to push out CPO due to reliability concerns relative to pluggables and NPO/XPO options, US$1.08bn in a base case with 100k switches and 72 FAUs per switch at US$150 ASP , and US$1.6bn in an upside case with 125k switches, 72 FAUs per switch and US$175 ASP . For Largan, we estimate downside case 10% share yields NT$810mn sales and NT$2.20 EPS, base case 40% share, NT$13.0bn sales and NT$35 EPS, and upside case 60% share, NT$28.4bn sales and NT$76 EPS.
Although we are optimistic on the market opportunity scaling up and Largan's competencies and progress developing these solutions, Largan's traction is not yet certain and it will compete in a crowded landscape. We believe Himax is already supplying wafer level optics for the collimator function with FOCI (3363.TWO) and TFC (300394.SZ) already has demonstrated capability and design-in on the FAU and lens assembly. Others that could vertically integrate include Coherent, Senko, Corning and Sumitomo, and we also note Genius sending samples and Sunny Optical's intention to develop for this market.
Our feedback at Semicon Taiwan indicates Coherent can make the FAU and lens by itself through capabilities merging with II-VI and demonstrated all in-house components at the booth except for the metal transceiver casing.
Figure 2: Largan base/upside/downside case for its opportunity and share
| Annual Scenario | CPO switches (k) | FAUs/switch | FAUs (mn) | ASP (US$) | TAM (US$mn) | Share | Sales (NT$mn) | Op Profit | EPS |
|---|---|---|---|---|---|---|---|---|---|
| Downside/Slow adoption | 75 | 72 | 5.4 | $50 | $270 | 10% | $810 | $344 | $2.2 |
| Base | 100 | 72 | 7.2 | $150 | $1,080 | 40% | $12,960 | $5,508 | $35 |
| Upside/fast adoption | 125 | 72 | 9 | $175 | $1,575 | 60% | $28,350 | $12,049 | $76 |
Source: UBS estimates
Smartphone lens business tracking behind, should have a mild 2026-27
Largan reported August sales at NT$5bn, is below seasonal 63-67% at only 53% of Q326 UBSe/Street +36-38% QoQ and down 16% YoY, suggesting muted momentum into its flagship customer (~80% of sales). July EPS was NT$13.94, 27% of UBSe Q3 NT $51.52 suggesting in-line GM/OpM at ~50%/39% but the lighter sales are more of a concern.
UBS expects flattish builds at best and a mild spec upgrade with one model variable aperture but foldable at similar lens spec and higher memory cost (+US$200-300 YoY). We still see mild growth and mid-teens multiple acceptable for the smartphone business, similar to its long-term average.
Figure 3: Largan August sales tracking behind UBSe/Street
| Largan | 3Q26 | 4Q26E | 4Q26E | |||
|---|---|---|---|---|---|---|
| (NT$bn) | Jul | Aug | UBSe | Consensus | UBSe | Consensus |
| Net Sales | 4.9 | 5.0 | 18.6 | 18.5 | 20.1 | 19.1 |
| %Sequential | 31.4% | 2.8% | 35.8% | 35.4% | 8.2% | 3.0% |
| %YoY | -9.9% | -16.0% | 5.4% | 5.0% | 17.0% | 10.9% |
| QTD %UBSe | 26% | 53% | ||||
| QTD% Consensus | 26% | 53% |
Source: Company data, Refinitiv, UBS estimates
Figure 4: UBS vs. VA Consensus Q126A-Q326E and 2025A-27E
| Q126 | Q226 | Q326E | Q326E | Q426E | Q426E | 2025 2026E | 2025 2026E | 2027E | 2027E | |
|---|---|---|---|---|---|---|---|---|---|---|
| (NT$m) | Actual | Actual | UBSe | VA | UBSe | VA | Actual UBSe | VA | UBSe | VA |
| Revenue | 15,544 | 13,665 | 18,566 | 18,151 | 20,094 | 18,829 | 61,148 | 67,869 66,189 | 77,189 | 76,277 |
| - QoQ / YoY | -9.7% | -12.1% | 35.9% | 32.8% | 8.2% | 3.7% | 2.8% | 11.0% 8.2% | 13.7% | 15.2% |
| Gross profit | 7,680 | 6,753 | 9,242 | 8,960 | 10,044 | 9,619 | 30,837 | 33,718 33,011 | 38,405 | 38,438 |
| - Gross margin | 49.4% | 49.4% | 49.8% | 49.4% | 50.0% | 51.1% | 50.4% | 49.7% 49.9% | 49.8% | 50.4% |
| Operating profit | 5,812 | 5,148 | 7,144 | 6,821 | 7,833 | 7,519 | 23,558 | 25,937 25,300 | 29,796 | 28,933 |
| - OP margin | 37.4% | 37.7% | 38.5% | 37.6% | 39.0% | 39.9% | 38.5% | 38.2% 38.2% | 38.6% | 37.9% |
| Non-op profit | 1,476 | 951 | 1,027 | 1,101 | 1,064 | 1,223 | 2,342 | 4,518 4,751 | 4,467 | 4,713 |
| Pre-tax profit | 7,288 | 6,099 | 8,171 | 7,923 | 8,897 | 8,742 | 25,900 | 30,455 30,051 | 34,263 | 33,736 |
| Tax | -1,112 | -1,373 | -1,385 | -1,290 | -1,499 | -1,631 | -4,340 | -5,369 -5,442 | -6,244 | -6,613 |
| - Tax rate | 15.3% | 22.5% | 17.0% | 16.3% | 16.9% | 18.7% | 16.8% | 17.6% 18.1% | 18.2% | 19.6% |
| Net profit | 6,123 | 4,670 | 6,736 | 6,604 | 7,348 | 7,082 | 21,275 | 24,877 24,491 | 28,019 | 27,102 |
| EPS (NT$) | 46.63 | 35.70 | 51.50 | 49.51 | 56.18 | 53.24 | 159.41 | 190.00 183.25 | 214.00 | 202.92 |
Source: Company data, Visible Alpha, UBS estimates. Note: EPS based on reported and may differ with cover page diluted EPS.
Figure 5: Largan and Genius monthly sales trend in line
Source: Company data
Figure 6: Largan margins stabilizing in recent years
Source: Company data, UBS estimates
Stock prices in our upside case ahead of traction; risk-reward skews negative
We maintain basic '26E/27E EPS at NT$190/NT$214 and NT$5,000 SOTP PT based on 1) 15x smartphone lens (NT$3,270) + 2) 50x CPO base case EPS of NT$35 for NT$1,730 (40% share, 100k switches/7.2mn FAUs, US$150/FAU, US$1.1bn TAM), high-end of peers due to its premium ~40-45% OpM. We view risk/reward skewed negative with downside to NT$2,500 on limited CPO success and softer smartphones, base case NT $5,000 for CPO traction and upside 22% if the stock is bid to our upside case NT$9,000 based on top-end 70x P/E on CPO earnings based on 60% share/125k switches/9mn FAUs, US$175 FAU ASP, US$1.58bn TAM).
Figure 7: UBS Base, Upside, and Downside Spectrum
| (NT$) | UBSe | UBSe | Upside Case | Upside Case | Downside Case | Downside Case | |
|---|---|---|---|---|---|---|---|
| 2025 | 2026 | 2027 | 2026 | 2027 | 2026 | 2027 | |
| Base smartphone business | Base smartphone business | Base smartphone business | Base smartphone business | Base smartphone business | Base smartphone business | Base smartphone business | Base smartphone business |
| Sales | $61,148 2.8% | $67,869 11.0% | $77,189 13.7% | $71,262 16.5% | $81,048 13.7% | $62,100 1.6% $29,268 | $70,628 13.7% $33,340 |
| YoY Growth | |||||||
| Gross Profit | $30,837 | $33,718 | $38,405 | $37,185 | $41,946 | ||
| GM% | 50.4% | 49.7% | 49.8% | 52.2% | 51.8% | 47.1% | 47.2% |
| Opex | $7,279 | $7,781 | $8,609 | $7,975 | $8,782 | $7,450 | $8,244 |
| Op Profit | $23,558 | $25,937 | $29,796 | 29,210 | 33,165 | 21,818 | 25,096 |
| OpM% | 38.5% | 38.2% | 38.6% | 41.0% | 40.9% | 35.1% | 35.5% |
| Non-Op | $2,342 | $4,518 | $4,467 | $4,518 | $4,467 | $4,518 | $4,467 |
| Pretax | $25,900 | $30,455 | $34,263 | $33,728 | $37,632 | $26,336 | $29,563 |
| Tax | ($4,340) | ($5,369) | ($6,244) | ($5,946) | ($6,858) | ($4,643) | ($5,388) |
| Net income | $21,275 | $24,877 | $28,019 | $27,573 | $30,774 | $21,484 | $24,176 |
| EPS | $159.41 | $190.00 | $214.00 | $210.59 | $235.04 | $164.09 | $184.65 |
| Shares | 133 | 131 | 131 | 131 | 131 | 131 | 131 |
| EPS vs. base case | 10.8% | 9.8% | -13.6% | -13.7% | |||
| Current Price | $7,400 | ||||||
| P/E | 15 | 16 | 13 | ||||
| Implied Valuation | $3,270 | $3,655 | $2,392 | ||||
| CPO Expected upside | CPO Expected upside | CPO Expected upside | CPO Expected upside | CPO Expected upside | CPO Expected upside | CPO Expected upside | CPO Expected upside |
| EPS | $35 | $76 | $2 | ||||
| P/E | 50 | 70 | 50 | ||||
| Implied Valuation | $1,730 | $5,345 | $108 | ||||
| Total Largan | Total Largan | Total Largan | Total Largan | Total Largan | Total Largan | Total Largan | Total Largan |
| Implied Share Price | $5,000 | $9,000 | $2,500 | ||||
| Upside/Downside | -32% | 22% | -66% |
Source: Company data, UBS estimates
Company name
Lens
Largan Precision
Ticker
- TW
Market Cap Share Price
(USSm)
(LCS)
30,677
EPS (LCS)
P/E (x)
2026E
2027E 2026E
190.00
214.00
2027E
38.9
34.6
P/BV (x)
2026E
2027E
5.0
Figure 8: Optical component peers average 38x 2027 with a broad range of 14-72x 2027 P/E
Optical supply chain players
Chipbond Technology
WIN Semiconductors
LandMark Optoelectronics Corp
Visual Photonics Epitaxy Co Ltd
IntelliEPI Inc (Cayman)
FOCI FIBER OPTIC COMMUNICATIONS, INC.
Ezconn Corp
Browave Corp
Fabrinet
Corning Incorporated
Coherent Corp
Lumentum Holdings Inc.
Marvell Technology, Inc.
MACOM Technology Solutions Holdings, Inc.
verage
4.6
3.8
ROE (%)
2026E
2027E
12.6
15.8
13.8
15.6
| 6147.TWO | 4,290 | 183 | 5.64 | 8.23 32.4 | 8.23 32.4 | 22.2 2.8 | 22.2 2.8 | 2.6 8.7 | 2.6 8.7 | 12.1 | 12.1 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 3105.TWO | 6,016 | 450 | 7.79 | 11.27 | 57.7 | 39.9 | 4.4 | 4.2 | 7.8 | 10.8 | |
| 10,004 | 3,120 | 19.66 | 43.07 | 158.7 | 72.4 | 57.9 | 35.9 | 35.2 | 47.9 | ||
| 2455. TW | 3,059 | 525 | 5.42 | 9.05 | 96.8 | 58 | 26.3 | 21.4 | 27.4 | 39.9 | |
| 4971. TWO | 908 | 611 | 7.09 | 11.70 | 86.2 | 52.2 | 10.7 | 8.9 | 13.4 | 18.7 | |
| 2,771 | 774 | 0.21 | 16.93 | 3775.6 | 45.7 | 35.1 | 20.7 | -1.8 | 55 | ||
| 6442.TW | 4,486 | 1,770 | 51.42 | 130.00 | 34.4 | 13.6 | 17.8 | 8.7 | 45.2 | 63.9 | |
| 3163. TWO | 2,147 | 720 | 7.89 | 21.17 | 91.3 | 34 | 18.2 | 11.3 | 21 | 38.6 | |
| FN.N | 14,155 | 395 | 13.79 | 18.20 | 28.7 | 21.7 | 6 | 4.7 | 21.8 | 23.4 | |
| GLW.N | 125,763 | 146 | 3.28 | 4.29 | 44.5 | 34 | 9.3 | 8.4 | 21.3 | 24.8 | |
| 51,780 | 264 | 5.46 | 9.37 | 48.4 | 28.2 | 4.9 | 4.6 | 10.9 | 16.1 | ||
| COHR.N LITE.OQ | 76,009 | 847 | 8.10 | 21.35 | 104.6 | 39.7 | 27.2 | 13.1 | 33.5 | 45 | |
| MRVL.OQ | 33.12 | 209 | 2.83 | 4.19 | 73.9 | 49.8 | 12.4 | 10.2 | 17.3 | 17.6 | |
| MTSI OQ | 19,853 | 260 | 5.48 | 8.38 | 47.5 | 31 | 12.2 | 9.4 | 25.4 | 32.1 | |
| 299.6 | 38.2 | 16.4 | 11.1 | 20 | 30.4 |
Source: UBSe, Eikon
Figure 9: Share price rally re-rates Largan well above its historical range
Source: LSEG Workspace
Figure 11: Op CF remains healthy vs. capex
Source: Company data, UBS estimates
Figure 10: Largan's share price now running well ahead of its fwd EPS pricing in CPO traction
Source: LSEG Workspace
Figure 12: Rising net cash share provides room for more payouts
Source: Company data, UBS estimates
Figure 13: UBS P&L for Largan - mild growth at stable margins in recent years
| Ticker Shares outstanding (mn) | Ticker Shares outstanding (mn) | 3008.TW 130.8 | Current Price (NT$) Mkt cap (NT$ mn) | Current Price (NT$) Mkt cap (NT$ mn) | Current Price (NT$) Mkt cap (NT$ mn) | $7,400 $967,905 |
|---|---|---|---|---|---|---|
| Year | 2022 | 2023 | 2024 | 2025 | 2026E | 2027E |
| Revenues (NT$ mn) | $47,675 | $48,842 | $59,458 | $61,148 | $67,869 | $77,189 |
| YoY Growth (%) | 2.4% | 21.7% | 2.8% | 11.0% | 13.7% | |
| Gross profit (NT$mn) | $26,083 | $23,794 | $31,209 | $30,837 | $33,718 | $38,405 |
| GM (%) | 54.7% | 48.7% | 52.5% | 50.4% | 49.7% | 49.8% |
| Operating profit (NT$mn) | $20,384 | $17,807 | $24,033 | $23,558 | $25,937 | $29,796 |
| OPM (%) | 42.8% | 36.5% | 40.4% | 38.5% | 38.2% | 38.6% |
| Net profit (NT$ mn) | $22,625 | $17,902 | $25,915 | $21,275 | $24,877 | $28,019 |
| EPS (NT$) | $169.52 | $134.13 | $194.17 | $159.41 | $190.00 | $214.00 |
| EPS growth (%) | -21% | 45% | -18% | 19% | 13% | |
| P/E (x) | 43.7 | 55.2 | 38.1 | 46.4 | 38.9 | 34.6 |
| Dividend yield (%) | 1% | 1.0% | 1.1% | 1.2% | 1.8% | 1.3% |
| P/B (x) | 6.4 | 6.0 | 5.3 | 5.2 | 4.9 | 4.6 |
| ROE (%) | 15% | 11% | 14% | 11% | 13% | 13% |
| Quarters | Q325 | Q425 | Q126 | Q226 | Q326E | Q426E |
|---|---|---|---|---|---|---|
| Revenues (NT$ mn) | $17,677 | $17,219 | $15,544 | $13,665 | $18,566 | $20,094 |
| QoQ Growth (%) | -2.6% | -9.7% | -12.1% | 35.9% | 8.2% | |
| Gross profit (NT$mn) | $8,352 | $8,260 | $7,680 | $6,753 | $9,242 | $10,044 |
| GM (%) | 47.2% | 48.0% | 49.4% | 49.4% | 49.8% | 50.0% |
| Operating profit (NT$mn) | $6,265 | $6,329 | $5,812 | $5,148 | $7,144 | $7,833 |
| OPM (%) | 35.4% | 36.8% | 37.4% | 37.7% | 38.5% | 39.0% |
| Net profit (NT$ mn) | $7,080 | $6,720 | $6,123 | $4,670 | $6,736 | $7,348 |
| EPS (NT$) | $53.05 | $50.35 | $45.88 | $34.99 | $51.45 | $56.12 |
Source: Company data, UBS estimates. Note: 2026E EPS based on reported.
Figure 14: UBS Cash Flow Summary - staying positive to invest in CPO
Annual (NT$mn)
Revenue
Capital spending
Capex/revenue (%)
Dep and amort
Depr/revenue (%)
Operating cash flow
Free cash flow
2021
$46,962
$5,850
12%
$4,650
10%
$20,878
$15,028
2022
$47,675
$8,256
17%
$5,031
11%
$44,207
$35,951
2023
$48,842
$8,080
17%
$5,299
11%
$18,199
$10,118
2024
$59,458
$11,126
19%
$6,038
10%
$31,579
$20,453
2025
$61,148
$12,338
20%
$7,511
12%
$26,080
$13,743
2026E
$67,869
$11,721
17%
$10,201
15%
$36,022
$24,301
2027E
$77,189
$11,135
14%
$11,972
16%
$38,348
$27,213
21-25 Avg
$52,817
$9,130
17%
$5,706
11%
$28,188
$19,058
| FCF and Dividends | 2021 | 2022 | 2023 | 2024 | 2025 | 2026E | 2027E | 21-25 Avg |
|---|---|---|---|---|---|---|---|---|
| FCF / share (NT$) | $112 | $269 | $76 | $153 | $103 | $186 | $208 | $143 |
| FCF / EV Yield (%) | 2% | 4% | 1% | 2% | 2% | 3% | 3% | 2% |
| FCF Yield (%) | 2% | 4% | 1% | 2% | 1% | 3% | 3% | 2% |
| Dividend/share (NT$) | $91.51 | $109.66 | $72.50 | $81.00 | $85.50 | $131.95 | $95.26 | $88.03 |
| Payout rate (%) | 50% | 79% | 43% | 60% | 44% | 83% | 50% | 55% |
| Dividend amount (NT$) | $12,274 | $14,636 | $9,676 | $10,811 | $11,412 | $17,276 | $12,472 | $11,762 |
| Pre-Dividend close (NT$) | $3,040.00 | $1,990.00 | $2,310.00 | $3,120.00 | $2,260.00 | $7,400.00 | $7,400.00 | |
| Dividend Yield (%) | 3.0% | 5.5% | 3.1% | 2.6% | 3.8% | 1.8% | 1.3% | 3.6% |
Source: Company data, UBS estimates
Upside/Downside Spectrum
Upside/Downside Spectrum
Largn (3008.TW) trading at 7,400 at closed Sept 4.
UPSIDE (NT$9,000): Our upside valuation of NT$3,655 is based on its average P/E of 16x off our 2027 upside case EPS of NT$235. We factor in faster than expected CPO progress to deliver upside EPS of NT$76 and 70x P/E at the high end of optical peers trading at 14-72x 2027E P/E to an implied valuation of NT$5,345, and total share price at NT$9,000.
BASE (NT$5,000): Our price target for its smartphone business is NT$3,270, with a 15x 2027 P/E applied on its base case EPS of NT$214 slightly below the long-term average of its historical P/E band to reflect the macro uncertainty. Paired with our base scenario of its CPO business at NT$35 EPS and 50x P/E, we arrive at an implied valuation of NT$1,730, and Largan's aggregate PT at NT$5,000.
DOWNSIDE (NT$2,500): Downside valuation at NT$2,392, based on low-end of its range 13x 2027 P/E. We take into consideration slower adoption of FAUs at its downside EPS of NT$2 and the same 50x P/E to an implied valuation of NT$108 for CPO contribution, and Largan's total share price at NT$2,500.
Figure 15: UBS base case, upside case and downside case
| (NT$) | UBSe | UBSe | Upside Case | Upside Case | Downside Case | Downside Case | |
|---|---|---|---|---|---|---|---|
| 2025 | 2026 | 2027 | 2026 | 2027 | 2026 | 2027 | |
| Base smartphone business | Base smartphone business | Base smartphone business | Base smartphone business | Base smartphone business | Base smartphone business | Base smartphone business | Base smartphone business |
| Sales YoY Growth Gross Profit GM% | $61,148 2.8% $30,837 50.4% | $67,869 11.0% $33,718 49.7% | $77,189 13.7% $38,405 49.8% | $71,262 16.5% $37,185 52.2% | $81,048 13.7% $41,946 51.8% | $62,100 1.6% $29,268 47.1% | $70,628 13.7% $33,340 47.2% |
| CPO Expected upside | CPO Expected upside | ||||||
| EPS | $25,937 $190.00 | $8,609 | $7,975 29,210 41.0% | $164.09 -13.6% | $8,244 | ||
| Opex Op Profit OpM% Non-Op | $7,279 $23,558 38.5% $2,342 $25,900 | $7,781 38.2% $4,518 $30,455 | $29,796 38.6% $4,467 $34,263 | $4,518 $33,728 | $8,782 33,165 40.9% $4,467 $37,632 ($6,858) | $7,450 21,818 35.1% $4,518 $26,336 | $4,467 $29,563 |
| Implied Valuation | $1,730 | 10.8% | 9.8% 70 | 131 | 25,096 35.5% | ||
| Pretax Tax Net income EPS | ($4,340) $21,275 $159.41 133 | ($5,369) $24,877 | ($6,244) $28,019 $214.00 | ($5,946) $27,573 $210.59 131 | $30,774 $235.04 131 | ($4,643) $21,484 | ($5,388) $24,176 $184.65 131 |
| Shares EPS vs. base | 131 | 131 | $9,000 | 13 | |||
| case Current Price | $7,400 | $76 | -13.7% | ||||
| P/E | |||||||
| 16 | |||||||
| Implied | 15 | $3,655 | |||||
| Valuation | $3,270 | $2,392 | |||||
| $2 | |||||||
| P/E | 50 | 50 | |||||
| $35 | |||||||
| $5,345 | $108 | ||||||
| Total Largan | Total Largan | Total Largan | Total Largan | Total Largan | Total Largan | Total Largan | Total Largan |
| Implied Share Price | $5,000 | $2,500 | |||||
| Upside/Downside | -32% | 22% | -66% |
Source: Company data, UBSe
Largan Precision (3008.TW)
| Income Statement (NT$m) | 12/23 | 12/24 | 12/25 | 12/26E | %ch | 12/27E | %ch | 12/28E | 12/29E | 12/30E |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 48,842 | 59,458 | 61,148 | 67,869 | 11.0 | 77,189 | 13.7 | 83,044 | 88,315 | 93,870 |
| Gross profit | 23,794 | 31,209 | 30,837 | 33,718 | 9.3 | 38,405 | 13.9 | 42,004 | 44,647 | 47,542 |
| EBITDA (UBS) | 23,106 | 30,070 | 31,069 | 36,139 | 16.3 | 41,768 | 15.6 | 45,863 | 46,836 | 49,806 |
| Depreciation & amortisation | (5,299) | (6,038) | (7,511) | (10,201) | -35.8 | (11,972) | -17.4 | (10,918) | (11,621) | (12,290) |
| EBIT (UBS) | 17,807 | 24,033 | 23,558 | 25,937 | 10.1 | 29,796 | 14.9 | 34,945 | 35,215 | 37,516 |
| Associates & investment income | 212 | 0 | 3 | 12 | 352.1 | 11 | -7.1 | 11 | 11 | 11 |
| Other non-operating income | 294 | 303 | 419 | 326 | -22.2 | 200 | -38.6 | 200 | 200 | 200 |
| Net interest | 3,934 | 4,404 | 4,259 | 3,946 | -7.3 | 4,256 | 7.9 | 4,384 | 4,516 | 4,651 |
| Exceptionals (incl goodwill) | (145) | 3,435 | (2,338) | 235 | - | 0 | - | 0 | 0 | 0 |
| Pre-tax profit | 22,102 | 32,174 | 25,900 | 30,455 | 17.6 | 34,263 | 12.5 | 39,540 | 39,941 | 42,378 |
| Tax | (4,200) | (5,963) | (4,340) | (5,369) | -23.7 | (6,244) | -16.3 | (6,722) | (6,790) | (7,204) |
| Profit after tax | 17,902 | 26,211 | 21,560 | 25,086 | 16.4 | 28,019 | 11.7 | 32,818 | 33,151 | 35,174 |
| Preference dividends | 0 | 0 | 0 | 0 | - | 0 | - | 0 | 0 | 0 |
| Minorities | 0 | (296) | (285) | (209) | 26.7 | 0 | - | 0 | 0 | 0 |
| Extraordinary items | 0 | 0 | - | 0 | - | 0 | 0 | 0 | ||
| Net earnings (local GAAP) | 17,902 | 0 25,915 | 0 21,275 | 24,877 | 16.9 | 28,019 | 12.6 | 32,818 | 33,151 | 35,174 |
| Net earnings (UBS) | 18,047 | 22,480 | 23,613 | 28,019 | 13.7 | 32,818 | 33,151 | 35,174 | ||
| Tax rate (%) | 19.0 | 18.5 | 16.8 | 24,642 17.6 | 4.4 5.2 | |||||
| 12/23 | 12/26E | %ch | 18.2 | 3.4 | 17.0 | 17.0 | 17.0 | |||
| Per Share (NT$) EPS (UBS, diluted) | 135.22 | 12/24 168.43 | 12/25 176.92 | 188.21 | 6.4 | 12/27E 214.00 | %ch 13.7 | 12/28E 250.66 | 12/29E 253.20 | 12/30E 268.65 |
| EPS (local GAAP, diluted) | 134.13 | 194.17 | 159.41 | 190.00 | 19.2 | 214.00 | 12.6 | 250.66 | 253.20 | 268.65 |
| EPS (UBS, basic) | 135.22 | 168.43 | 176.92 | 188.21 | 6.4 | 214.00 | 13.7 | 250.66 | 253.20 | 268.65 |
| DPS (net) (NT$) | 85.50 | 67.50 | 97.50 | 80.00 | 95.36 | 19.2 | 107.40 | |||
| Cash EPS (UBS, diluted) 1 | 174.92 | 213.67 | 233.20 | 266.13 | -17.9 14.1 | 305.44 | 14.8 | 334.05 | 125.80 341.96 | 127.07 362.52 |
| Book value per share | 1,234.64 | 1,382.91 | 1,430.07 | 1,505.39 | 5.3 | 1,624.04 | 7.9 | 1,767.41 | 1,891.72 | 2,030.18 |
| Average shares (diluted) | 133 | 133 | 133 | 131 | -1.9 | 131 | 0.0 | 131 | 131 | 131 |
| Balance Sheet (NT$m) | 12/23 | 12/24 | 12/25 | 12/26E | %ch | 12/27E | %ch | 12/28E | 12/29E | 12/30E |
| Cash and equivalents Other current assets | 111,655 22,666 | 117,985 27,779 | 122,309 31,977 | 124,539 46,375 | 1.8 45.0 | 139,268 53,637 | 11.8 15.7 | 155,001 58,260 | 170,311 61,963 | 188,490 65,841 |
| Total current assets | 134,321 | 145,764 | 154,285 | 170,914 | 192,905 | 12.9 | 232,274 | 254,332 | ||
| Net tangible fixed assets | 41,135 | 46,936 | 51,472 | 10.8 | 52,610 | -1.6 | 213,261 52,271 | 50,698 | 47,956 | |
| Net intangible fixed assets | 53,448 | 3.8 | 0 | - | 0 | 0 | 0 | |||
| Investments / other assets | 0 | 0 | 0 | 0 | - 25.6 | 20,285 | 7.5 | 20,126 | 20,137 | 20,148 |
| Total assets | 19,682 195,138 | 23,827 216,527 | 15,029 220,787 | 18,872 243,234 | 10.2 | 265,800 | 9.3 | 285,658 | 303,110 | 322,435 |
| Trade payables & other ST liabilities | 29,517 | 54.4 | 52,968 | 54,224 | 56,596 | |||||
| 30,375 | 29,749 | 45,936 | - | 15.3 | 55,399 | |||||
| Short term debt Total current liabilities | 0 29,517 | 203 | 0 29,749 | 0 45,936 | 54.4 | 0 52,968 | - 15.3 | 0 54,224 | 0 55,399 | 0 56,596 |
| Long term debt | 0 | 30,578 0 | 0 | 0 | - | 0 | - | 0 | 0 | 0 |
| Other long term liabilities | 110 | 561 | 171 | 200 | 17.3 | 200 | 0.0 | 31 | 31 | 31 |
| Preferred shares Total liabilities (incl pref shares) | 0 | 0 | 0 | 0 46,136 | - | 0 53,168 | - | 0 | 0 | 0 56,627 |
| Common s/h equity | 29,627 165,510 | 31,139 | 29,919 | 54.2 | 15.2 | 54,255 | 55,430 | 265,808 | ||
| 185,388 | 190,868 | 197,098 | 3.3 | 212,632 0 | 7.9 | 231,403 0 | 247,679 | |||
| Minority interests Total liabilities & equity | 0 195,138 | 0 216,527 | 0 220,787 | 0 243,234 | - 10.2 | 265,800 | - 9.3 | 285,658 | 0 303,110 | 0 322,435 |
| Cash Flow (NT$m) | 12/23 | 12/24 | 12/25 | 12/26E | %ch | 12/27E | %ch | 12/28E | 12/29E | 12/30E |
| Net income (before pref divs) | 17,902 | 25,915 | 21,275 | 24,877 | 16.9 | 28,019 | 12.6 | 32,818 | 33,151 | 35,174 |
| Depreciation & amortisation | 5,299 | 6,038 | 7,511 | 10,201 | 35.8 | 11,972 | 17.4 | 10,918 | 11,621 | 12,290 |
| Net change in working capital | (8,990) | (6,633) | (7,328) | 8,864 | - | (7,876) | - | (3,366) | (2,528) | (2,682) |
| Other operating | (212) | 295 | 282 | 197 | -30.1 | 6,233 | NM | (11) | (11) | (11) 44,771 |
| Operating cash flow | 13,999 | 25,615 | 21,740 | 44,140 | 103.0 | 38,348 | -13.1 | 40,359 | 42,234 (10,049) | (9,547) |
| Tangible capital expenditure | (8,080) 0 | (11,126) | (12,338) 0 | (11,721) | 5.0 | (11,135) | 5.0 | (10,578) 0 | 0 | |
| Intangible capital expenditure | 0 | 0 | - | 0 | - | 0 | ||||
| Net (acquisitions) & disposals | (2,111) (959) | (13) | (1,200) | 962 (965) | - - | 0 | - | 0 0 | 0 0 | 0 0 |
| Other investing | (4,927) | 4,302 | 0 | - | ||||||
| Investing cash flow | (11,151) | (16,066) | (9,236) | (11,724) | -26.9 | (11,135) | 5.0 | (10,578) | (10,049) | (9,547) |
| Equity dividends paid | (9,676) 0 | (10,811) 0 | (11,412) 0 | (17,276) | -51.4 | (12,485) | 27.7 - | (14,048) 0 | (16,874) 0 | (17,045) 0 |
| Share issues / (buybacks) | 0 | - | 0 | |||||||
| Other financing | (34) | 1,255 | (2,937) | (4,133) | -40.7 | 0 | - | 0 | 0 | 0 |
| Change in debt & pref shares | (19) | 212 | (212) (14,561) | 0 | - | 0 | - | 0 (14,048) | 0 (16,874) | 0 (17,045) |
| Financing cash flow Cash flow inc/(dec) in cash | (9,729) (6,881) | (9,344) | (2,057) | (21,408) 11,007 | -47.0 | (12,485) 14,729 | 41.7 | 15,310 | 18,179 | |
| - | 33.8 | 15,733 | ||||||||
| FX / non cash items | 6,823 | 205 6,125 | 6,380 | (8,777) | - | 0 | 100.0 | 0 | 0 | 0 |
| Balance sheet inc/(dec) in cash | (59) | 6,330 | 4,324 | 2,230 | 14,729 | NM | 15,733 | 15,310 | ||
| -48.4 | 18,179 |
Source: Company accounts, UBS estimates. (UBS) metrics use reported figures which have been adjusted by UBS analysts. 1 Cash EPS (UBS, diluted) is calculated using UBS net income adding back depreciation and amortization.
Largan Precision (3008.TW)
| Valuation (x) | 12/23 | 12/24 | 12/25 | 12/26E | 12/27E | 12/28E | 12/29E | 12/30E |
|---|---|---|---|---|---|---|---|---|
| P/E (local GAAP, diluted) | 16.4 | 13.1 | 14.8 | 38.9 | 34.6 | 29.5 | 29.2 | 27.5 |
| P/E (UBS, diluted) | 16.2 | 15.1 | 13.3 | 39.3 | 34.6 | 29.5 | 29.2 | 27.5 |
| P/CEPS | 12.6 | 11.9 | 10.1 | 27.8 | 24.2 | 22.2 | 21.6 | 20.4 |
| Equity FCF (UBS) yield% | 2.0 | 4.3 | 3.0 | 3.3 | 2.8 | 3.1 | 3.3 | 3.6 |
| Dividend yield (net)% | 3.9 | 2.7 | 4.1 | 1.1 | 1.3 | 1.5 | 1.7 | 1.7 |
| P/BV | 1.8 | 1.8 | 1.6 | 4.9 | 4.6 | 4.2 | 3.9 | 3.6 |
| EV/revenues (core) | 3.6 | 3.6 | 3.1 | NM | NM | 9.8 | 9.0 | 8.3 |
| EV/EBITDA (UBS core) | 7.7 | 7.1 | 6.0 | 23.2 | 19.9 | 17.8 | 17.1 | 15.7 |
| EV/EBIT (core) | 10.0 | 8.9 | 8.0 | 32.3 | 27.9 | 23.3 | 22.7 | 20.9 |
| EV/OpFCF (core) | 8.1 | 7.4 | 6.3 | 24.0 | 20.4 | 18.1 | 17.3 | 15.9 |
| EV/op. invested capital | 3.9 | 4.1 | 3.3 | 13.7 | 13.2 | 12.6 | 12.0 | 11.7 |
| Enterprise value (NT$m) | 12/23 | 12/24 | 12/25 | 12/26E | 12/27E | 12/28E | 12/29E | 12/30E |
| Market cap. | 294,465 | 340,820 | 315,906 | 971,753 | 971,753 | 971,753 | 971,753 | 971,753 |
| Net debt (cash) | (111,675) | (114,718) | (120,045) | (123,424) | (131,903) | (147,134) | (162,656) | (179,401) |
| Buy out of minorities | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Pension provisions/other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total enterprise value | 182,790 | 226,102 | 195,861 | 848,329 | 839,850 | 824,619 | 809,097 | 792,352 |
| Non core assets | (4,916) | (12,460) | (8,517) | (9,934) | (9,945) | (9,955) | (9,966) | (9,976) |
| Core enterprise value | 177,874 | 213,642 | 187,344 | 838,395 | 829,905 | 814,663 | 799,131 | 782,376 |
| Growth (%) | 12/23 | 12/24 | 12/25 | 12/26E | 12/27E | 12/28E | 12/29E | 12/30E |
| Revenue | 2.4 | 21.7 | 2.8 | 11.0 | 13.7 | 7.6 | 6.3 | 6.3 |
| EBITDA (UBS) | (9.1) | 30.1 | 3.3 | 16.3 | 15.6 | 9.8 | 2.1 | 6.3 |
| EBIT (UBS) | (12.6) | 35.0 | (2.0) | 10.1 | 14.9 | 17.3 | 0.8 | 6.5 |
| EPS (UBS, diluted) | 3.8 | 24.6 | 5.0 | 6.4 | 13.7 | 17.1 | 1.0 | 6.1 |
| Net DPS | 21.9 | (21.1) | 44.4 | (17.9) | 19.2 | 12.6 | 17.1 | 1.0 |
| Margins & Profitability (%) | 12/23 | 12/24 | 12/25 | 12/26E | 12/27E | 12/28E | 12/29E | 12/30E |
| Gross profit margin | 48.7 | 52.5 | 50.4 | 49.7 | 49.8 | 50.6 | 50.6 | 50.6 |
| EBITDA margin | 47.3 | 50.6 | 50.8 | 53.2 | 54.1 | 55.2 | 53.0 | 53.1 |
| EBIT (UBS) margin | 36.5 | 40.4 | 38.5 | 38.2 | 38.6 | 42.1 | 39.9 | 40.0 |
| Net earnings (UBS) margin | 37.0 | 37.8 | 38.6 | 36.3 | 36.3 | 39.5 | 37.5 | 37.5 |
| ROIC (EBIT) | 39.3 | 46.2 | 40.9 | 42.4 | 47.5 | 54.1 | 52.9 | 56.0 |
| ROIC post tax | 31.8 | 36.6 | 34.6 | 34.9 | 38.9 | 44.9 | 43.9 | 46.4 |
| ROE (UBS) | 11.3 | 12.8 | 12.6 | 12.7 | 13.7 | 14.8 | 13.8 | 13.7 |
| Capital structure & Coverage (x) | 12/23 | 12/24 | 12/25 | 12/26E | 12/27E | 12/28E | 12/29E | 12/30E |
| Net debt / EBITDA | (4.8) | (3.9) | (3.9) | (3.4) | (3.3) | (3.4) | (3.6) | (3.8) |
| Net debt / total equity% | (67.5) | (63.5) | (64.1) | (63.2) | (65.5) | (67.0) | (68.8) | (70.9) |
| Net debt / (net debt + total equity)% | NM | NM | NM | NM | NM | NM | NM | NM |
| Net debt/EV% | (61.1) | (50.7) | (61.3) | (14.5) | (15.7) | (17.8) | (20.1) | (22.6) |
| Capex / depreciation% | 152.5 | 184.3 | 164.3 | 114.9 | 93.0 | 96.9 | 86.5 | 77.7 |
| Capex / revenue% | 16.5 | 18.7 | 20.2 | 17.3 | 14.4 | 12.7 | 11.4 | 10.2 |
| EBIT / net interest | - | - | - | - | - | - | - | - |
| Dividend cover (UBS) | 1.6 | 2.5 | 1.8 | 2.4 | 2.2 | 2.3 | 2.0 | 2.1 |
| Div. payout ratio (UBS)% | 63.2 | 40.1 | 55.1 | 42.5 | 44.6 | 42.8 | 49.7 | 47.3 |
| Revenues by division (NT$m) | 12/23 | 12/24 | 12/25 | 12/26E | 12/27E | 12/28E | 12/29E | 12/30E |
| Others | 48,842 | 59,458 | 61,148 | 67,869 | 77,189 | 83,044 | 88,315 | 93,870 |
| Total | 48,842 | 59,458 | 61,148 | 67,869 | 77,189 | 83,044 | 88,315 | 93,870 |
| 12/25 | ||||||||
| EBIT (UBS) by division (NT$m) | 12/23 | 12/24 | 12/26E | 12/27E | 12/28E | 12/29E | 12/30E | |
| Others | 17,807 | 24,033 | 23,558 | 25,937 | 29,796 | 34,945 | 35,215 | 37,516 37,516 |
| Total | 17,807 | 24,033 | 23,558 | 25,937 | 29,796 | 34,945 | 35,215 |
Source: Company accounts, UBS estimates. (UBS) metrics use reported figures which have been adjusted by UBS analysts.
Forecast returns
| Forecast price appreciation | -32.4% |
|---|---|
| Forecast dividend yield | 1.1% |
| Forecast stock return | -31.4% |
| Market return assumption | 6.3% |
| Forecast excess return | -37.6% |
Company Description
Founded in 1987, Largan Precision (Largan) is one of the world's leading manufacturers of lenses used in cameras and IT products. It specialises in plastic/hybrid lenses and, to a lesser extent, glass lenses and modules. In 2022, 20MP+ camera lenses were 10-20% of Largan's shipment mix, 10MP lenses were 50-60%, 8MP lenses were 0-10% and other lenses were 30-40%.
Valuation Method and Risk Statement
Our price target is based on SOTP valuation on the CPO opportunity and traditional lens business.
We think Largan's downside risks include: 1) ongoing pricing pressure from smartphone OEM clients and increasingly intense competition among lens suppliers; and 2) a slower-thanexpected smartphone demand recovery in China, and 3) CPO commercial success below the market's elevated expectations.
We believe the key upside risk is a faster-than-expected CPO qualification process at Largan. In addition, if the company demonstrates exceptionally efficient and highly accurate automation capabilities, it could support greater market share gains within the industry than we currently anticipate.
Quantitative Research Review
UBS Global Research publishes a quantitative assessment of its analysts' responses to certain questions about the likelihood of an occurrence of a number of short term factors in a product known as the 'Quantitative Research Review'. The views for this month can be found below. Views contained in this assessment on a particular stock reflect only the views on those short term factors which are a different timeframe to the 12-month timeframe reflected in any equity rating set out in this note. For previous responses please make reference to (i) previous UBS Global Research reports; and (ii) where no applicable research report was published that month, the Quantitative Research Review which can be found at https://neo.ubs.com/quantitative, or contact your UBS sales representative for access to the report or the Quantitative Research Team on ubs-quant-answers@ubs.com. A consolidated report which contains all responses is also available and again you should contact your UBS sales representative for details and pricing or the Quantitative Research Team on the email above.
Largan Precision
| Question | Response |
|---|---|
| 1. Is the industry structure facing the firm likely to improve or deteriorate over the next six months? Rate on a scale of 1-5 (1 = getting worse, 3 = no change, 5 = getting better, N/A = no view) | 3 |
| 2. Is the regulatory/government environment facing the firm likely to improve or deteriorate over the next six months? Rate on a scale of 1-5 (1 = getting tougher 3 = no change, 5 = getting better, N/A = no view) | 3 |
| 3. Over the last 3-6 months in broad terms have things been improving/no change/getting worse for this stock? Rate on a scale of 1-5 (1 = getting a lot worse, 3 = not much change, 5 = getting a lot better, N/A = no view) | 5 |
| 4. Relative to the current CONSENSUS EPS forecast, is the next company EPS update likely to lead to: (1 = negative surprise vs consensus, 3 = in-line with consensus, 5 = positive surprise vs consensus expectations, N/A = no view) | 2 |
| 5. What's driving the difference? | We expect downside to consensus in 2026 due to slower smartphone sales through August. We indicate things getting better for the stock in the past 3-6 months on the smartphone traction. |
| 6. Relative to YOUR current earnings forecast, is there relatively greater risk at the next earnings result of:(1 = downside skew risk to earnings, 3 = equal upside or downside risk to earnings, 5 = upside skew risk to earnings, N/A = no view) | 5 |
| 7. What's driving the difference? | |
| 8. Is there an upcoming catalyst for the company over the next three months? | |
| 9. Is there an actual or approximate date for the catalyst? | |
| 10. Is the catalyst date an actual or approximate date? | |
| 11. What is the catalyst? |
Required Disclosures
This document has been prepared by UBS Securities Pte. Ltd., Taipei Branch, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates, including former Credit Suisse AG and its subsidiaries, branches and affiliates are referred to herein as "UBS".
For information on the ways in which UBS manages conflicts and maintains independence of its UBS Global Research product; historical performance information; certain additional disclosures concerning UBS Global Research recommendations; and terms and conditions for certain third party data used in research report, please visit https://www.ubs.com/disclosures. Unless otherwise indicated, information and data in this report are based on company disclosures including but not limited to annual, interim, quarterly reports and other company announcements. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made available upon request. UBS Securities Co. Limited is licensed to conduct securities investment consultancy businesses by the China Securities Regulatory Commission. UBS acts or may act as principal in the debt securities (or in related derivatives) that may be the subject of this report. This recommendation was finalized on: 06 September 2026 09:15 AM GMT. UBS has designated certain UBS Global Research department members as Derivatives Research Analysts where those department members publish research principally on the analysis of the price or market for a derivative, and provide information reasonably sufficient upon which to base a decision to enter into a derivatives transaction. Where Derivatives Research Analysts co-author research reports with Equity Research Analysts or Economists, the Derivatives Research Analyst is responsible for the derivatives investment views, forecasts, and/or recommendations. Quantitative Research Review: UBS Global Research publishes a quantitative assessment of its analysts' responses to certain questions about the likelihood of an occurrence of a number of short term factors in a product known as the 'Quantitative Research Review'. Views contained in this assessment on a particular stock reflect only the views on those short term factors which are a different timeframe to the 12-month timeframe reflected in any equity rating set out in this note. For the latest responses, please see the Quantitative Research Review Addendum at the back of this report, where applicable. For previous responses please make reference to (i) previous UBS Global Research reports; and (ii) where no applicable research report was published that month, the Quantitative Research Review which can be found at https:// neo.ubs.com/quantitative, or contact your UBS sales representative for access to the report or the Quantitative Research Team on ubsquant-answers@ubs.com. A consolidated report which contains all responses is also available and again you should contact your UBS sales representative for details and pricing or the Quantitative Research team on the email above.