J P M O R G A N Asia Pacific Equity Research

12 April 2024

Largan Precision Co Ltd Overweight

3008.TW, 3008 TT
Fully ramp capacity in 2H24; Enhancing product mix; Price (11 Apr 24):NT$2,315.00
▲Price Target (Jun-24):NT$2,800.00
OW Prior (Jun-24):NT$2,700.00

Although we sense that the Street may feel that Largan’s management has left a mixed
message after the earnings call, we are getting more positive on the company, due to Technology
1) positive profits growth in 2024E, 2) product mix improvement in the near future William Yang AC
driven by Android models, 3) full UTR in 2H24 even after capacity expansion, and (886-2) 2725-9899
[email protected]
4) potential gross margin recovery thanks to yield rate enhancement. Trading at 13x
2024E P/E (vs. historical avg of 17x) with 23% EPS growth in 2024E, we think if there Megan Hsueh
(886-2) 2725-9249
is any share price volatility, it would create buying opportunities; OW.
[email protected]

• 1Q24 review. EPS of NT$45.8 beat JPMe/consensus estimates of NT$39.8/ J.P. Morgan Securities (Taiwan) Limited

NT$32.9, thanks mainly to greater non-op income support. The beat on non-op
income was driven by the substantial FX gain (~NT$2.34bn gain). For its
Key Changes (FYE Dec)
operating profit (+21% YoY, -50% QoQ), it was a 13% miss vs. Street
Prev Cur
estimates, due to revenue decline on seasonality with GM drop. GM of 49.2% Adj. EPS - 24E (NT$) 159.14 164.99
(vs. 49.4% in 1Q23 and 52.8% in 4Q23) was lower than our estimate given
lower UTR and sales scale, offsetting improving yield rate. Quarterly Forecasts (FYE Dec)
Adj. EPS (NT$)
• 2024 outlook. For its near-term 2Q24 sales, we model it to slightly decline by 2023A 2024E 2025E
4% QoQ given low season, and the company expects April and May sales to Q1 24.64 45.79A 39.24
be similar to March sales of NT$3.5bn, while the order visibility for June Q2 27.68 27.71 32.13
remains low at the moment. Looking into 2H24, management thinks its 4Q24 Q3 44.58 41.08 42.62
Q4 37.18 50.41 55.99
UTR could be full with new capacity entering production, mainly due to more FY 134.06 164.99 169.99
complicated manufacturing technology for larger-sized lens (higher end spec
with higher ASP). We believe the company could deliver decent profit growth Style Exposure
this year, backed by further product mix enhancement through higher Android
rev mix and more advanced spec adoption in new models, in addition to
continued yield improvements. With these positive factors going forward, we
model its 2024 sales and EPS to grow 11% and 23% YoY, respectively, despite
relatively muted 1H24.
• Other takeaways. (1) The smartphone lens spec upgrades have not been
meaningful in 1H24, most of which will be in 2H24; (2) for the next 6-12
months, we do not see too many upgrades in lower end models, while upgrades
mainly happen in flagship models; (3) ASP, UTR and yield will be the main
factors to impact GM in 2024, and the magnitude will be ASP > UTR > yield;
(4) yield rate will continue to improve this year, and the yield for 2H24 new
models should also improve more smoothly with experiences from last year;
(5) the main reason for the expected full UTR in 4Q24 is not volume up but lens
becoming bigger (so the manufacturing becomes more complicated, requiring
more capacity); (6) the company has obtained molding glass + plastic lens
projects this year, despite relatively small volume; (7) it is likely to have new
capacity expansion in 2025, with the larger size of the manufacturing site.
• Implication. We lift our 2024E EPS by 4% to NT$165, mainly to reflect a
better outlook in 2H24 and stronger non-op support. Our Jun-24 PT is revised
up to NT $2,800, based on a 17x 2024E P/E, in-line with the average P/E since
2012.
Sources for: Style Exposure – J.P. Morgan Quantitative and Derivatives Strategy; all other tables are company data and J.P. Morgan estimates.

See page 11 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.

www.jpmorganmarkets.com
William Yang AC Asia Pacific Equity Research
(886-2) 2725-9899 12 April 2024 JPMORGAN
[email protected]

Price Performance Summary Investment Thesis and Valuation

Investment Thesis
We remain Overweight on Largan, as we believe the lens
migration on high-end/flagship smartphones in 2024 will help
the company enhance its industry-leading position and improve
its fundamentals. We prefer Largan within the smartphone
supply chain, as we believe that the high-end lens migration will
benefit Largan more and its valuation is more attractive.
Valuation
Our Jun-24 PT of NT$2,800 is based on a 17x 2024E P/E, in line
YTD 1m 3m 12m
with the average P/E since 2012.
Abs -19.3% -8.1% -9.2% 7.2%
Rel -35.0% -13.3% -27.5% -23.2%
Performance Drivers
Company Data
Shares O/S (mn) 133
52-week range (NT$) 2,880.00-1,925.00
Market cap ($ mn) 9,660
Exchange rate 31.98
Free float(%) 69.5%
3M - Avg daily vol (mn) 0.77
3M - Avg daily val ($ mn) 60.2
Volatility (90 Day) 31
Index TAIEX
BBG BUY|HOLD|SELL 22|3|0

Key Metrics (FYE Dec)

NT$ in millions FY23A FY24E FY25E
Financial Estimates
Revenue 48,842 54,406 59,614
Adj. EBIT 17,802 20,082 22,508
Adj. EBITDA 23,224 26,035 28,739
Adj. net income 17,892 22,020 22,688
Adj. EPS 134.06 164.99 169.99
BBG EPS 138.52 159.51 172.21
Cashflow from operations 20,535 40,584 31,337
FCFF 8,624 33,857 24,029
Margins and Growth
Revenue Growth Y/Y (%) 2.4% 11.4% 9.6%
EBIT margin 36.4% 36.9% 37.8%
EBIT growth (12.6%) 12.8% 12.1%
EBITDA margin 47.5% 47.9% 48.2%
EBITDA Growth Y/Y (%) (8.9%) 12.1% 10.4%
Net margin 36.6% 40.5% 38.1%
Adj. EPS growth (20.7%) 23.1% 3.0%
Ratios
Adj. tax rate 19.0% 18.3% 18.1%
Interest cover NM NM NM
Net debt/Equity NM NM NM
Net debt/EBITDA NM NM NM
ROE 11.2% 12.8% 12.3%
Valuation
FCFF yield 2.8% 11.0% 7.8%
Dividend yield 2.9% 3.6% 0.0%
EV/Revenue 3.9 3.0 2.5
EV/EBITDA 8.3 6.3 5.1
Adj. P/E 17.3 14.0 13.6

Source: J.P. Morgan Quantitative and Derivatives Strategy for Performance Drivers; company data, Bloomberg Finance L.P. and J.P. Morgan estimates for all other tables. Note: Price history may not be
complete or exact.

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William Yang AC Asia Pacific Equity Research
(886-2) 2725-9899 12 April 2024 JPMORGAN
[email protected]

Estimate review and revisions

Table 1: 1Q24 earnings review

NT$mn, NT$, %, bps

NT$mn 1Q24 Actual JPMe Variance Consensus Variance 1Q23 % YoY 4Q23 % QoQ
Sales 11,313 12,416 -9% 12,205 -7% 9,136 24% 17,883 -37%
Gross Profit 5,563 6,586 -16% 6,017 -8% 4,513 23% 9,438 -41%
GM (%) 49.2% 53.0% -387 bps 49.3% -13 bps 49.4% -22 bps 52.8% -360 bps
Operating profit 3,961 5,121 -23% 4,571 -13% 3,269 21% 7,906 -50%
OPM (%) 35.0% 41.2% -623 bps 37.5% -244 bps 35.8% -77 bps 44.2% -920 bps
Pretax profit 7,430 6,332 17% 5,410 37% 3,909 90% 6,130 21%
PTM (%) 65.7% 51.0% 1,468 bps 44.3% 2,135 bps 42.8% 2,289 bps 34.3% 3,139 bps
Net profit 6,111 5,318 15% 4,453 37% 3,289 86% 4,971 23%
NM (%) 54.0% 42.8% 1,118 bps 36.5% 1,753 bps 36.0% 1,802 bps 27.8% 2,622 bps
EPS (NT$) 45.8 39.8 15% 32.9 39% 24.6 86% 37.2 23%

Source: Company data, J.P. Morgan estimates, Bloomberg Finance L.P.

Table 2: J.P. Morgan estimates: New vs. old

NT$mn, NT$, bps, %
NT$mn, NT$, % Revised Prior Change
2Q24E 3Q24E 2024E 2Q24E 3Q24E 2024E 2Q24E 3Q24E 2024E
Sales 10,872 14,455 54,406 11,523 14,644 56,510 -6% -1% -4%
Gross profit 5,446 7,274 26,827 6,031 7,242 28,320 -10% 0% -5%
Gross margin 50.1% 50.3% 49.3% 52.3% 49.5% 50.1% -225 bps 87 bps -81 bps
OP profit 3,870 5,395 20,082 4,452 5,119 21,307 -13% 5% -6%
OP margin 35.6% 37.3% 36.9% 38.6% 35.0% 37.7% -305 bps 237 bps -79 bps
Net income 3,698 5,484 22,020 4,138 5,259 21,240 -11% 4% 4%
EPS (NT$) 27.7 41.1 165.0 31.0 39.4 159.1 -11% 4% 4%

Source: J.P. Morgan estimates.

Table 3: J.P. Morgan estimates vs. Bloomberg consensus

NT$mn, NT$, bps, %
NT$mn, NT$, % JPMe Bloomberg Differences
2Q24E 3Q24E 2024E 2025E 2Q24E 3Q24E 2024E 2025E 2Q24E 3Q24E 2024E 2025E
Sales 10,872 14,455 54,406 59,614 11,365 16,092 58,867 64,219 -4% -10% -8% -7%
Gross profit 5,446 7,274 26,827 29,598 5,635 8,119 29,933 35,475 -3% -10% -10% -17%
Gross margin 50.1% 50.3% 49.3% 49.7% 49.6% 50.5% 50.8% 55.2% 51 bps -13 bps -154 bps -559 bps
OP profit 3,870 5,395 20,082 22,508 4,205 6,227 23,014 24,974 -8% -13% -13% -10%
OP margin 35.6% 37.3% 36.9% 37.8% 37.0% 38.7% 39.1% 38.9% -141 bps -137 bps -218 bps -113 bps
Net income 3,698 5,484 22,020 22,688 3,859 5,923 21,310 22,997 -4% -7% 3% -1%
EPS (NT$) 27.7 41.1 165.0 170.0 28.8 44.0 159.5 172.2 -4% -7% 3% -1%

Source: J.P. Morgan estimates, Bloomberg Finance L.P.

3
William Yang AC Asia Pacific Equity Research
(886-2) 2725-9899 12 April 2024 JPMORGAN
[email protected]

Earnings call highlights

1Q24 depreciation and non-op support?

• Depreciation: NT$1.38bn.
• FX gain (in non-op income): NT$2.34bn.

Any one-off expenses or inventory write-off loss in 1Q24?

• 1Q24 no one-off expenses.

1Q24 opex details?

• The composition of our 1Q24 opex was no big change vs. past quarters.

Revenue trend in the next few months?

• Monthly sales guidance: April and May would both be similar to March, while June
visibility is still limited.

Have you seen any lens upgrade trend in smartphone recently or in 2H24?

• We have not seen too many new brands adopting higher specs in 1H24.
• Spec upgrades will happen mainly in 2H24, mostly through wider adoption of
existing high-end specs (e.g. periscope, glass + plastic lens, variable aperture).
• The focus for this year will be the penetration magnitude of these existing specs.

ASP pressure for these high-end specs in 2024 (as it has started to gain adoption
since 2023)?

• If customers continue to use the same spec this year, ASP will drop a little.

Customer design-in usually needs 6-12 months, so we can see 2H24-1H25’s new
model specs. Have you see any trends?

• Some customers’ flagship models have improvements.

• For lower end models, we do not see too many upgrades. Upgrades mainly happen
in flagship models.

4
William Yang AC Asia Pacific Equity Research
(886-2) 2725-9899 12 April 2024 JPMORGAN
[email protected]

With more G+P lens adoption, do you think this spec upgrade trend could help us
sustain our leadership position in the industry or widen our tech gap vs peers?

• Others could also do G+P lens.

• We think our industry position will remain similar, as G+P lens are not too difficult
for us.

Why do customers adopt molding glass?

• The index is higher, so the resolution of lens could also be higher.

• The lens cost will also be higher for customers, but they want higher resolution for
their lens.
• We have obtained small amount of project volume starting from this year, which will
mainly be in 2H24.

What is the reason for only a small amount of molding glass adoption?

• Demand is the main concern (not supply).

Can we do molding glass ourselves?

• We have capacity to make it ourselves, but we also purchase from others.

• Our molding glass manufacturing site is in Taiwan.
• If we want to expand molding glass capacity, the lead time will be around six
months, but we do not have expansion plans now.

Capacity and UTR?

• In 4Q24, we will run all of our capacity, both old and new ones (UTR full).
• The main reason for 4Q24 full UTR is the lens becoming bigger so the
manufacturing becomes more complicated, not because of higher volume.

2025 new capacity expansion plan?

• The new site will be bigger than the current one.

• We do not have further details now.

Do we do prisms ourselves?

• For glass prisms, we purchase them.

5
William Yang AC Asia Pacific Equity Research
(886-2) 2725-9899 12 April 2024 JPMORGAN
[email protected]

• For plastic prisms, we make them ourselves, but now, it only passed verification and
still not sure if customers will adopt plastic ones.

Any update on periscope yield?

• Yield rate will keep improving.

• 2Q24 yield should be better than 1Q24 yield.
• For 2H24, the yield improvement for the new models will improve more smoothly
(as we have experiences last year).

Will our GM go up if our yield improves?

• Not sure. We will need to negotiate with customers.

2Q24 GM impacting factors?

• ASP, UTR and yield will be the main factors. The impact level: ASP > UTR > yield.
• Old model yield will improve.

VCM upgrade plan in the future?

• Yes, we are co-developing with customers.

View on variable aperture adoption in mid to high end market?

• There are already some customers co-developing with us.

Is there new lens spec adopted in AI smartphones?

• Yes there are customers discussing with us but still at the very initial stage, so we are
not sure about the actual adoption.

6
William Yang AC Asia Pacific Equity Research
(886-2) 2725-9899 12 April 2024 JPMORGAN
[email protected]

Valuation
Our Jun-24 PT of NT$2,800 is based on a 17x 2024E P/E, in line with the average of
17x since 2012.

Figure 1: Largan’s share price vs. 1yr fwd P/E Figure 2: Largan’s share price vs. 1yr fwd P/B and 1yr fwd ROE
NT$ NT$, %
6,000 6,000 60%
5,000 5,000 50%
4,000 40%
4,000
3,000 30%
3,000
2,000 20%
2,000 1,000 10%
1,000 0 0%
0 Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan-
Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Price 2x 3x 4x
Price 5x 10x 15x 20x 25x 5x 6x Fwd ROE

Source: J.P. Morgan estimates, Bloomberg Finance L.P. Source: J.P. Morgan estimates, Bloomberg Finance L.P.

Figure 3: Largan’s share price vs. historical mean 1yr fwd P/E Figure 4: Largan’s share price vs. historical mean 1yr fwd P/B
x x
35 8.0 +2std
30 +2std 7.0
+1std
25 6.0
+1std
5.0 mean
20
mean 4.0
15 -1std
3.0
10 -1std
2.0 -2std
5 -2std 1.0
- -
Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan-
12 13 14 15 16 17 18 19 20 21 22 23 24 12 13 14 15 16 17 18 19 20 21 22 23 24

Source: J.P. Morgan estimates, Bloomberg Finance L.P. Source: J.P. Morgan estimates, Bloomberg Finance L.P.

7
William Yang AC Asia Pacific Equity Research
(886-2) 2725-9899 12 April 2024 JPMORGAN
[email protected]

Table 4: Earnings table

2022 2023 2024E 2025E 2021 2022 2023 2024E 2025E
NT$mn, NT$, % 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE 2QE 3QE 4QE
Revenue 10,133 9,675 13,477 14,390 9,136 8,194 13,629 17,883 11,313 10,872 14,455 17,765 13,225 12,321 14,591 19,476 46,962 47,675 48,842 54,406 59,614
Depreciation 1,262 1,266 1,285 1,304 1,326 1,342 1,368 1,385 1,462 1,480 1,497 1,514 1,532 1,549 1,566 1,584 4,745 5,118 5,422 5,954 6,231
COGS 4,726 4,277 6,240 6,350 4,623 4,156 7,828 8,441 5,750 5,426 7,181 9,221 6,654 6,147 7,209 10,005 18,813 21,593 25,049 27,578 30,015
Gross Profit 5,407 5,399 7,237 8,040 4,513 4,039 5,801 9,442 5,563 5,446 7,274 8,544 6,570 6,174 7,383 9,471 28,150 26,083 23,794 26,827 29,598
Operating Expense 1,397 1,364 1,685 1,257 1,244 1,287 1,919 1,541 1,602 1,576 1,879 1,688 1,680 1,663 1,897 1,850 5,002 5,704 5,991 6,745 7,090
EBIT 4,010 4,034 5,552 6,783 3,269 2,751 3,882 7,900 3,961 3,870 5,395 6,856 4,891 4,511 5,486 7,621 23,148 20,379 17,802 20,082 22,508
Net Interest Income 219 287 454 731 923 990 1,023 996 1,080 1,128 1,133 1,153 1,344 1,285 1,287 1,276 952 1,694 3,936 4,494 5,192
Net Other Income 2,463 1,880 3,706 -2,348 -283 1,281 2,138 -2,775 2,389 0 0 0 0 0 0 0 -1,073 5,702 361 2,389 0
Pre Tax Profit 6,692 6,201 9,712 5,166 3,909 5,023 7,043 6,122 7,430 4,997 6,528 8,009 6,235 5,796 6,773 8,897 23,024 27,771 22,097 26,964 27,700
Tax 1,248 1,256 1,553 1,144 620 1,328 1,093 1,159 1,319 1,299 1,044 1,282 998 1,507 1,084 1,424 4,355 5,202 4,200 4,944 5,012
Net Profit (reported) 5,443 4,945 8,159 4,022 3,289 3,695 5,951 4,963 6,111 3,698 5,484 6,728 5,237 4,289 5,689 7,473 18,668 22,569 17,897 22,020 22,688
EPS (NT$) 40.8 37.0 61.1 30.1 24.6 27.7 44.6 37.2 45.8 27.7 41.1 50.4 39.2 32.1 42.6 56.0 139.2 169.1 134.1 165.0 170.0
Margins (%)
Gross Margin 53.4 55.8 53.7 55.9 49.4 49.3 42.6 52.8 49.2 50.1 50.3 48.1 49.7 50.1 50.6 48.6 59.9 54.7 48.7 49.3 49.7
Opex ratio 13.8 14.1 12.5 8.7 13.6 15.7 14.1 8.6 14.2 14.5 13.0 9.5 12.7 13.5 13.0 9.5 10.7 12.0 12.3 12.4 11.9
Operating Margin 39.6 41.7 41.2 47.1 35.8 33.6 28.5 44.2 35.0 35.6 37.3 38.6 37.0 36.6 37.6 39.1 49.3 42.7 36.4 36.9 37.8
Net Margin 53.7 51.1 60.5 28.0 36.0 45.1 43.7 27.8 54.0 34.0 37.9 37.9 39.6 34.8 39.0 38.4 39.8 47.3 36.6 40.5 38.1
Sequential Growth (%)
Revenue -22 -5 39 7 -37 -10 66 31 -37 -4 33 23 -26 -7 18 33
Gross Profit -26 0 34 11 -44 -11 44 63 -41 -2 34 17 -23 -6 20 28
EBIT -33 1 38 22 -52 -16 41 104 -50 -2 39 27 -29 -8 22 39
EPS (reported) 6 -9 65 -51 -18 12 61 -17 23 -39 48 23 -22 -18 33 31
YoY Growth (%)
Revenue -14 -4 13 10 -10 -15 1 24 24 33 6 -1 17 13 1 10 -16 2 2 11 10
Gross Profit -29 -12 2 10 -17 -25 -20 17 23 35 25 -10 18 13 1 11 -25 -7 -9 13 10
EBIT -37 -20 -4 13 -18 -32 -30 16 21 41 39 -13 23 17 2 11 -28 -12 -13 13 12
EPS (reported) 3 68 56 -21 -40 -25 -27 23 86 0 -8 36 -14 16 4 11 -24 21 -21 23 3
Sales mix (%)
iPhone camera lens 56 50 58 57 57 46 43 41 41 36 38 41 40 37 38 43 60 56 46 39 40
Android camera lens 33 35 33 29 32 41 39 29 39 43 38 30 38 42 41 30 34 32 35 37 37
iPad camera lens 2 3 2 3 3 2 2 0 0 0 0 0 0 0 0 0 2 2 1 0 0
iPhone VCM 2 1 3 6 6 4 3 4 3 3 2 4 3 2 2 3 1 3 4 3 3
iPhone periscope assembly 0 0 0 0 0 0 7 19 16 13 17 21 16 14 14 20 0 0 9 17 17
Others 8 11 3 6 3 6 5 7 2 5 5 3 4 4 5 3 3 7 5 4 4

Source: Company data, J.P. Morgan estimates.

8
William Yang AC Asia Pacific Equity Research
(886-2) 2725-9899 12 April 2024 JPMORGAN
[email protected]

Investment Thesis, Valuation and Risks

Largan Precision Co Ltd (Overweight; Price Target: NT$2,800.00)
Investment Thesis
We remain Overweight on Largan, as we believe the lens migration on high-end/flagship
smartphones in 2024 will help the company enhance its industry-leading position and
improve its fundamentals. We prefer Largan within the smartphone supply chain, as we
believe that the high-end lens migration will benefit Largan more and its valuation is more
attractive.
Valuation
Our Jun-24 PT of NT$2,800 is based on a 17x 2024E P/E, in line with the average P/E since
2012.
Risks to Rating and Price Target
Key downside risks to our rating and price target include: (1) a much-faster-than-expected
loss of market share to rivals, especially in the high-end lens market; (2) weaker smartphone
sell-through; and (3) slower camera lens spec migration.

9
William Yang AC Asia Pacific Equity Research
(886-2) 2725-9899 12 April 2024 JPMORGAN
[email protected]

Largan Precision Co Ltd: Summary of Financials

Income Statement FY22A FY23A FY24E FY25E FY26E Cash Flow Statement FY22A FY23A FY24E FY25E FY26E
Revenue 47,675 48,842 54,406 59,614 - Cash flow from operating activities 28,194 20,535 40,584 31,337 -
COGS (21,593) (25,049) (27,578) (30,015) - o/w Depreciation & amortization 5,118 5,422 5,954 6,231 -
Gross profit 26,083 23,794 26,827 29,598 - o/w Changes in working capital 507 (2,784) 12,610 2,418 -
SG&A (1,550) (1,800) (1,982) (1,925) -
Adj. EBITDA 25,497 23,224 26,035 28,739 - Cash flow from investing activities (9,023) (10,470) (3,057) (3,057) -
D&A (5,118) (5,422) (5,954) (6,231) - o/w Capital expenditure (6,545) (8,726) (3,057) (3,057) -
Adj. EBIT 20,379 17,802 20,082 22,508 - as % of sales 13.7% 17.9% 5.6% 5.1% -
Net Interest 1,690 3,934 4,494 5,192 -
Adj. PBT 27,771 22,097 26,964 27,700 - Cash flow from financing activities (8,945) (7,878) (9,049) (11,134) -
Tax (5,202) (4,200) (4,944) (5,012) - o/w Dividends paid (9,364) (11,412) (9,049) (11,134) -
Minority Interest 0 0 0 0 - o/w Shares issued/(repurchased) 0 0 0 0 -
Adj. Net Income 22,564 17,892 22,020 22,688 - o/w Net debt issued/(repaid) 19 (19) 0 0 -
Reported EPS 169.10 134.09 164.99 169.99 - Net change in cash 10,226 2,187 28,478 17,147 -
Adj. EPS 169.06 134.06 164.99 169.99 -
Adj. Free cash flow to firm 20,275 8,624 33,857 24,029 -
DPS 85.50 67.80 83.42 0.00 - y/y Growth 15.1% (57.5%) 292.6% (29.0%) -
Payout ratio 50.6% 50.6% 50.6% 0.0% -
Shares outstanding 133 133 133 133 -
Balance Sheet FY22A FY23A FY24E FY25E FY26E Ratio Analysis FY22A FY23A FY24E FY25E FY26E
Cash and cash equivalents 114,610 116,797 145,275 162,422 - Gross margin 54.7% 48.7% 49.3% 49.7% -
Accounts receivable 8,051 10,091 12,792 14,024 - EBITDA margin 53.5% 47.5% 47.9% 48.2% -
Inventories 5,191 4,591 5,162 5,601 - EBIT margin 42.7% 36.4% 36.9% 37.8% -
Other current assets 1,351 2,842 2,403 2,634 - Net profit margin 47.3% 36.6% 40.5% 38.1% -
Current assets 129,202 134,321 165,632 184,681 -
PP&E 37,831 41,135 38,238 35,064 - ROE 15.2% 11.2% 12.8% 12.3% -
LT investments 1,814 4,916 4,916 4,916 - ROA 12.5% 9.4% 10.5% 9.8% -
Other non current assets 16,123 14,766 14,766 14,766 - ROCE 11.2% 9.0% 9.5% 10.0% -
Total assets 184,970 195,138 223,551 239,426 - SG&A/Sales 3.3% 3.7% 3.6% 3.2% -
Net debt/Equity NM NM NM NM -
Short term borrowings 19 0 0 0 - Net debt/EBITDA NM NM NM NM -
Payables 1,690 1,732 2,583 2,823 -
Other short term liabilities 27,679 27,786 42,376 46,457 - Sales/Assets (x) 0.3 0.3 0.3 0.3 -
Current liabilities 29,388 29,517 44,960 49,280 - Assets/Equity (x) 1.2 1.2 1.2 1.3 1.3
Long-term debt 0 0 0 0 - Interest cover (x) NM NM NM NM -
Other long term liabilities 473 110 110 110 - Operating leverage (788.1%) (516.5%) 112.4% 126.2% -
Total liabilities 29,861 29,627 45,070 49,390 - Tax rate 18.7% 19.0% 18.3% 18.1% -
Shareholders' equity 155,109 165,510 178,482 190,036 - Revenue y/y Growth 1.5% 2.4% 11.4% 9.6% -
Minority interests - - - - - EBITDA y/y Growth (8.6%) (8.9%) 12.1% 10.4% -
Total liabilities & equity 184,970 195,138 223,551 239,426 - EPS y/y Growth 21.5% (20.7%) 23.1% 3.0% -
BVPS 1,156.32 1,240.07 1,337.26 1,423.83 - Valuation FY22A FY23A FY24E FY25E FY26E
y/y Growth 9.4% 7.2% 7.8% 6.5% - P/E (x) 13.7 17.3 14.0 13.6 -
P/BV (x) 2.0 1.9 1.7 1.6 -
Net debt/(cash) (114,591)(116,797)(145,275)(162,422) - EV/EBITDA (x) 7.6 8.3 6.3 5.1 -
Dividend Yield 3.7% 2.9% 3.6% 0.0% -
Source: Company reports and J.P. Morgan estimates.
Note: NT$ in millions (except per-share data).Fiscal year ends Dec. o/w - out of which

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William Yang AC Asia Pacific Equity Research
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Analyst Certification: The Research Analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple Research Analysts
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with respect to each security or issuer that the Research Analyst covers in this research) that: (1) all of the views expressed in this report
accurately reflect the Research Analyst’s personal views about any and all of the subject securities or issuers; and (2) no part of any of the
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requirements, that the Research Analyst’s analysis was made in good faith and that the views reflect the Research Analyst’s own opinion,
without undue influence or intervention.
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Important Disclosures

Market Maker/ Liquidity Provider: J.P. Morgan is a market maker and/or liquidity provider in the financial instruments of/related to Largan
Precision Co Ltd.
Client: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as clients: Largan Precision Co Ltd.
Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies)
as clients, and the services provided were non-investment-banking, securities-related: Largan Precision Co Ltd.
Non-Investment Banking Compensation Received: J.P. Morgan has received compensation in the past 12 months for products or services
other than investment banking from Largan Precision Co Ltd.
Debt Position: J.P. Morgan may hold a position in the debt securities of Largan Precision Co Ltd, if any.

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Date Rating Price (NT$) Price Target
(NT$)
07-Oct-21 N 2090.00 2,400
07-Apr-22 N 1775.00 2,000
14-Apr-22 N 1630.00 1,950
15-Jul-22 N 1905.00 2,100
13-Oct-22 N 1750.00 2,080
16-Nov-22 OW 2125.00 2,500
28-Mar-23 OW 2260.00 2,550
08-Sep-23 OW 2070.00 2,400
11-Jan-24 OW 2525.00 2,600
12-Jan-24 OW 2550.00 2,700

The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period.
J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated
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because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the
price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia and ex-India)

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and U.K. small- and mid-cap Equity Research, each stock’s expected total return is compared to the expected total return of a benchmark
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the certifying Research Analyst’s coverage universe can be found on J.P. Morgan’s Research website, https://www.jpmorganmarkets.com .
Coverage Universe: Yang, William: AAC Technologies Holdings (2018) (2018.HK), AP Memory Technology Corp (6531.TW), ASMedia
Technology Inc. (5269.TW), Advanced Energy Solution Holding (6781.TW), Advantech (2395.TW), Andes Technology Corp (6533.TW), Asia
Vital Components (3017.TW), Auras Technology (3324.TW), Genius Electronic Optical Co., Ltd (3406.TW), GlobalWafers Co., Ltd
(6488.TWO), Largan Precision Co Ltd (3008.TW), Macronix (2337.TW), Parade Technologies (4966.TWO), Realtek Semiconductor
(2379.TW), Silergy Corp (6415.TW), Simplo Technology Co Ltd (6121.TWO), Speed Tech Corp (5457.TWO), Sunny Optical Technology
Group Co. (2382) (2382.HK), Winbond (2344.TW)

J.P. Morgan Equity Research Ratings Distribution, as of April 06, 2024

Overweight Neutral Underweight
(buy) (hold) (sell)
J.P. Morgan Global Equity Research Coverage* 48% 39% 14%
IB clients** 49% 45% 35%
JPMS Equity Research Coverage* 46% 42% 12%
IB clients** 70% 66% 52%

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Completed 12 Apr 2024 12:02 AM HKT Disseminated 12 Apr 2024 12:02 AM HKT

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