Largan Rides on Solid iPhone 14 Sales and USD; FVE Maintained at TWD 2,600

We maintain our fair value estimate for Largan Precision at TWD 2,600 per share as its business continues to be resilient due to greater exposure to Apple, whose demand held up better than other smartphone brands. As well as a strong USD, better-than-expected demand for ultra-premium smartphones translates to better pricing, driving Largan’s revenue in TWD terms. We think Largan will ramp up sales in lower-margin voice coil motors, and we reduced our revenue forecasts for nonsmartphone businesses. Still, we find Largan’s shares undervalued as we are confident in its long-term profitability recovery. It is an attractive defensive play with high USD exposure, an attractive dividend yield, a resilient customer portfolio, and relatively limited downside risk compared with other smartphone lens makers.