Largan's treasury stock reactivates, with a plan to defend the market using 10 billion in funds for 2.67 million shares, making a major return after four years

Leading optical lens company Largan Precision (3008), facing operational pressures, has once again implemented a major move to stabilize its stock price. The company held a board meeting on December 19th and announced the initiation of a share repurchase plan, planning to invest NT$179.7 billion starting from December 22nd to buy back 2.67 million shares, approximately 2% of its outstanding shares. This marks Largan’s significant protective measure since 2021, resuming after four years.

Operational slowdown triggers protective mechanism, stock faces test

Largan’s difficulties are clearly reflected in its revenue data. In November, the company’s consolidated revenue was NT$5.303 billion, down 16% month-over-month and 12% year-over-year, hitting a five-month low. The company admitted that customer order volumes in December are expected to be similar to November, implying Q4 revenue will be around NT$17 billion, showing both quarter and year declines.

Although cumulative revenue for the first 11 months increased by 3% compared to the same period last year, growth momentum has waned. The company further explained that the current full utilization of capacity is not due to a significant increase in orders but rather due to increased process complexity. Additionally, gross margin in Q3 fell to 47.2%, the lowest in nearly eight quarters, pressured by exchange rate fluctuations, increased proportion of outsourced components, and yield issues in new processes. Especially after November, operational momentum clearly weakened, exerting continuous pressure on the stock price.

Flexible buyback price range demonstrates strong protective stance

The share repurchase plan will run from December 19th, 2023, to February 11th, 2024, with a buyback price range set between NT$1,600 and NT$3,200 per share. Notably, the company emphasized that even if the stock price falls below NT$1,600, it will steadfastly execute the buyback, demonstrating its determination and confidence in stabilizing the stock price. This broad price range reflects the company’s assessment of long-term operational prospects and its commitment to protecting shareholder interests.

Historical comparison: nearly quadrupled scale, increased resolve

This is not Largan’s first such action. The last share repurchase occurred from late October to December 2021, when the plan was to buy back 1.342 million shares. Ultimately, about 672,000 shares were purchased, with an execution rate of only 50%, costing NT$1.4 billion, at an average price of NT$2,085.63 per share.

Four years later, the scale of this buyback has significantly increased: the number of shares to be repurchased has expanded to 2.67 million (almost double the previous plan), with a budget of NT$179.7 billion (128 times the previous actual expenditure), indicating a much stronger resolve and effort to stabilize the stock price. This scale expansion reflects that the current operational environment is more challenging than four years ago.

Stock reaction and future outlook

Today (December 19th), Largan’s stock opened at NT$2,035 and closed at NT$2,060, up 1.48% for the day. The market responded positively to the announcement of the share repurchase plan, but whether it can truly reverse the operational downturn remains to be seen, depending on subsequent execution progress and signs of industry momentum recovery. The actual execution rate of this buyback, the average purchase price, and its tangible support for the stock price will continue to be key points of investor and market attention.