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Hon Hai shares rebound on sales; TAIEX up, led by tech stocks

2017/12/11 13:51:00

Taipei, Dec. 11 (CNA) Shares in Taiwan-based manufacturing giant Hon Hai Precision Industry Co. staged a rebound on Monday as investors seized on strong sales data for the company in November to pick up bargains after the stock performed poorly in recent sessions, dealers said.

Buying in Hon Hai, an assembler of iPhones and iPads, spread to other "Apple concept stocks," including contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), pushing up the broader market by almost 1 percent higher, they said.

As of 12:30 p.m., shares in Hon Hai had gained 3.31 percent at NT$96.70 (US$3.22), with 56.01 million shares changing hands on the Taiwan Stock Exchange, where the weighted index was up 0.93 percent at 10,495.77 points.

Among other gaining tech stocks, TSMC, the most heavily weighted stock on the local market, had risen 0.66 percent to NT$228.50.

Hon Hai shares attracted buying soon after the local equity market opened and remained strong in the wake of solid November sales, which indicated an increase in shipments of the premium iPhone X, which went on global sale on Nov. 3, dealers said.

On Friday, Hon Hai announced that it posted NT$569.60 billion in consolidated sales in November, a new high for the company. The November figure was up 17.33 percent from a month earlier and 18.5 percent from the previous year.

The sales report calmed recent market worries over demand for the iPhone X and the technology bottlenecks the Taiwanese supplier faced in assembling the gadget, dealers said.

"The recent selling in Hon Hai shares resulted from rumors of unsatisfactory shipments of the iPhone X. But, it turns out Hon Hai had really strong sales in November," MasterLink Securities analyst Tom Tang said. "It was no surprise that bargain hunters rushed to chase the stock today to take advantage of its low valuation."

"The current buying also reflected optimism that Hon Hai will report a new high in sales for the fourth quarter of this year due to a likely buying spree during the Christmas season," Tang said, referring to expected good sales for the manufacturer in December.

After the November sales report, the market is expecting Hon Hai to report no less than NT$1.5 trillion in consolidated sales for the October-December period, and fourth quarter revenue could even challenge NT$1.55 trillion, a new high, up more than 40 percent from the previous quarter.

A U.S-based brokerage echoed the upbeat tone, saying Hon Hai's strong shipment of iPhones offset the lower sales of its PC and computing device manufacturing division in November. Such a strong showing from iPhone X shipments is expected to push up Hon Hai's sales for the fourth quarter to NT$1.51 trillion, the brokerage said.

The U.S. securities house said it has maintained a target price of NT$135 on Hon Hai shares and left an "overweight" rating unchanged.

"However, after recent selling, Hon Hai shares could face strong short term technical resistance ahead of NT$102. Investors need to remain alert," Tang said.

(By Chung Jung-feng and Frances Huang)
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