Taipei, March 22 (CNA) Shares of Taiwan-based contract electronics maker Wistron Corp. (緯創) jumped Tuesday morning after the company reported on Monday a significant improvement in its bottom line in 2016, dealers said.
The buying also reflected the market's bullish outlook toward Wistron because of expectations that it will get orders from Apple Inc. to roll out iPhones, they said.
As of 10:22 a.m., shares of Wistron had gained 6.58 percent to NT$28.35 (US$0.93) on the Taiwan Stock Exchange, where the weighted index was up 0.39 percent at 9,951.14.
"Wistron shares benefited soon after the market opened from its improved profitability in 2016," MasterLink Securities analyst Tom Tang said. "The company reported a much higher operating margin last year on the back of strong smart device manufacturing."
At an investor conference Monday, Wistron reported net profit for 2016 of NT$2.96 billion, up 121.96 percent from a year earlier, with earnings per share of NT$1.20, compared with EPS of NT$0.55 in 2015.
Operating income rose 151.58 percent in 2016 from a year earlier to NT$6.01 billion, and the company's operating margin was 0.91 percent, improving from 0.38 percent seen a year earlier.
In the fourth quarter alone, Wistron posted a net profit of NT$1.45 billion, up 183.40 percent from a quarter earlier, with EPS of NT$0.59, compared with EPS of NT$0.21 in the third quarter.
Its operating margin for the October-December period was 1.07 percent, up from 0.76 percent a quarter earlier.
"More importantly, investors have high hopes that Wistron will secure orders from Apple to become an iPhone assembler," Tang said, referring to recent media reports that Wistron will expand its production capacity in Bangalore to assemble next-generation iPhones.
While Wistron did not respond to the reports on possible Apple orders, it did say that smartphone devices will account for more than 20 percent of its total sales in 2017, up from about 16 percent in 2016.
"The stock has become one of the favorites of foreign institutional investors due to the iPhone leads," Tang said.
"When their holdings in Hon Hai Precision Industry Co., the most important iPhone assembler, reached a certain level, foreign institutional investors started allocating part of their funds to similar stocks, like Wistron."
According to Tang, foreign institutional investors have bought a net 122 million Wistron shares since the end of December, and foreign investors now own a 49.24 percent stake in the company.
At the investor conference, Wsitron said it budgeted US$400 million for capital expenditure in 2017, with 90 percent of that expected to be used for production equipment purchases.
Meanwhile, Wistron announced Monday that it will issue a dividend of NT$1.5 per share for 2016, consisting of a NT$1.2 cash dividend and a NT$0.3 stock dividend.
(By Pan Chi-I and Frances Huang)