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Hon Hai shares soar despite failed bid for Toshiba assets

2017/09/21 15:53:06

Taipei, Sept. 21 (CNA) Shares of manufacturing giant Hon Hai Precision Industry Co. (鴻海) rebounded sharply Thursday as investors seemed undeterred by Toshiba Corp's decision not to sell its memory chip assets to the Taiwanese company, dealers said.

Following heavy losses in recent sessions, Hon Hai's encountered follow-through selling in early trade Thursday but bargain hunting soon emerged, dealers said.

After the stock dropped to the day's low of NT$105.00, buying emerged, pushing its share price into positive territory, and continued until the end of the session, dealers said.

Hon Hai shares ended 4.12 percent higher at NT$111.00, with 101.48 million shares changing hands on the Taiwan Stock Exchange, where the weighted index ended up 0.56 percent at 10,578.44 points.

"Hon Hai's botched bid for the Japanese company Toshiba was widely expected and that's why investors seemed undeterred by that negative lead and rushed to take advantage of the stock's relatively low valuation after its recent heavy losses," said Alex Huang, an analyst at Mega International Investment Services Corp.

After the Sept. 12 release of Apple Inc.'s latest iPhones, Hon Hai, the main contract manufacturer of iPhones, had dropped 9.86 percent as investors scrambled to unload their holdings and pocket their gains.

"Today, they were buying Hon Hai shares for trading purposes, ignoring the company's failure to acquire Toshiba's memory chip assets," Huang said. "But despite today's gains, I don't think it's wise for investors to chase Hon Hai shares right away since the stock is expected to face stiff technical resistance at around NT$114-NT$115."

The market is still waiting for the real sales number of the new iPhones, he said.

Hon Hai, also known as Foxconn in the global market, had been one of the aggressive bidders for Toshiba Memory, as it sought to broaden its product portfolio.

However, Toshiba, the world's second-largest producer of NAND memory chips, announced Wednesday that it had decided to sell Toshiba Memory to a consortium led by Bain Capital Private Equity for 2 trillion Japanese yen (US$18 billion).

"The failure to acquire Toshiba Memory is not the end of the world for Hon Hai," Huang said. "If our bid had succeeded, there would have been uncertainty down the road for Hon Hai to manage the chip operations."

According to international business wires, Toshiba is part of the Bain-led consortium, which also comprises Japan's Hoya Corp., South Korean DRAM supplier SK Hynix, data storage firm Seagate Technology, and three buyers of Toshiba chips - Apple, Dell and Kingston.

The deal is expected to be completed by the end of March next year, according to Toshiba.

(By Jalen Chung and Frances Huang)
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