Largan Precision: CPO catalysts alongside firm core smartphone lens demand supports further upside

Research evidence excerpt

Largan Precision: CPO catalysts alongside firm core smartphone lens demand supports further upside

oming catalysts developing

its automated production line, successfully sampling customers and securing design wins that can go

into mass production in the 2028-29 timeframe, with downside back to the base value of the

smartphone lens business if it fails to secure traction in the CPO market.

EVIDENCE Largan has demonstrated samples at Computex and expressed confidence on its development at its

AGM, a more upbeat tone than its traditionally conservative outlook. The company is now on an

aggressive schedule to develop an automated line by September 2026 and move toward customer

production 6-12 month later. For smartphone lens, its top customer has been tracking to 20% YoY

growth in H126 on a strong iPhone cycle and Largan’s monthly sales are tracking to upside to UBS/

consensus estimates in Q226 to support upward revisions into results. Our supply chain checks and

management commentary points to introduction of higher value variable aperture lens in H226.

What's priced in Largan is currently trading above the high end of its historical range at 23x/20x our 2026E/27E EPS vs.

a long-term range of 13-18x forward consensus earning, high for the lens opportunity but not fully

pricing in success penetrating the CPO component market. We note optical component peers trade

at 40–70x with an average of ~50x 2027E P/E (Genius at 19x/17x 2026/27 P/E). We shift from P/E to

SOTP valuation, with our revised target at NT$5000 blending 15x 2027 P/E valuing base smartphone

business at NT$3,300 and 48x P/E in-line with peers based on NT$35 EPS expected value for the

optical business. We also note further support with NT$127bn net cash (NT$953/share). Post the