Largan Optical initiates share buyback to stabilize the market, deploying over 100 billion yuan for self-rescue for the first time in four years

Domestic optical lens leader Largan Precision (3008) can no longer sit still. As recent months’ operations have fallen into difficulty, the company held a board meeting on December 19th and decided to initiate a share repurchase plan, with an estimated expenditure of NT$179.7 billion to buy back its own shares. This move marks the company’s first aggressive market intervention since 2021, after four years.

Grand Scale Share Repurchase Plan Unveiled

According to the company’s announcement, the share repurchase program will run from December 19th until February 11th, 2024, with plans to buy back 2.67 million shares, approximately 2% of the total outstanding shares. The company set the buyback price range between NT$1,600 and NT$3,200 per share. Even if the stock price falls below the lower limit, the buyback will continue, demonstrating a strong commitment to market stabilization.

This share repurchase scale is significantly larger than the previous one. In 2021, the plan was to buy back 1.342 million shares, with an actual execution rate of only 50%, totaling NT$1.4 billion. Now, the budget has increased by over a hundred times, reflecting the heightened challenges faced by the company.

Operational Difficulties Emerge; Share Repurchase as Emergency Relief

The driving force behind this decision is the rapid decline in Largan’s recent operational performance. In November, consolidated revenue was NT$5.303 billion, down 16% month-on-month and 12% year-on-year, hitting a nearly five-month low. The company expects December’s shipment momentum to be similar to November, and analysts estimate Q4 revenue will approach NT$17 billion, facing both quarterly and annual declines.

Although revenue for the first 11 months of this year still grew by 3% compared to the same period last year, this growth was not driven by increased orders but by increasingly complex manufacturing processes. The gross profit margin in Q3 fell to 47.2%, the lowest in nearly eight quarters, pressured by exchange rate fluctuations, rising costs of purchased components, and lower-than-expected yields of new products.

Market Response Cautious

Largan’s stock opened today at NT$2,035 and closed at NT$2,060, up 1.48% for the day. Investors’ expectations for the effectiveness of the share repurchase plan remain to be seen, especially considering that the previous buyback effort had only a 50% execution rate. Whether this time can meet expectations and provide substantial support to the stock price will be the focus of subsequent market attention.