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Hon Hai shares rebound on November sales

2018/12/11 12:38:50

Taipei, Dec. 11 (CNA) Shares in Taiwan-based manufacturing giant Hon Hai Precision Industry Co. staged a technical rebound on Tuesday morning after the iPhone assembler reported a day earlier its highest-ever sales for November, dealers said.

The stock moved higher in line with the broader market as investors took a breather and Wall Street stabilized overnight, but it is too early to say whether such a rebound will continue as trade friction between the United States and China remains, they said.

As of 12:09 p.m., shares in Hon Hai had gained 1.33 percent to reach NT$68.60 (US$2.22) with 19.43 million shares changing hands on the Taiwan Stock Exchange, where the weighted index was up 0.54 percent at 9,699.98.

Before the November sales report was released Monday, Hon Hai shares dipped to a new low of NT$67.70 at the close, the lowest since Oct. 5, 2011, when the stock ended at NT$67.60.

Due to the technical rebound, Hon Hai's market capitalization moved above NT$950 billion on Tuesday morning, rising from NT$938.3 billion Monday to NT$950.7 billion.

"Today's buying was largely sparked by the November sales as bargain hunters turned active for short-term play," MasterLink Securities analyst Tom Tang said.

In a statement, Hon Hai said its November consolidated sales rose 1.99 percent from a month earlier to NT$601.44 billion in November, the highest level ever for the month and also the second monthly high for the company. The November figure was also up 5.59 percent from a year earlier.

Hon Hai's November sales also bucked the weaker performance of other Taiwanese Apple suppliers at a time of lower than expected global demand for the latest three new iPhone models -- the iPhone XS, iPhone XS Max and iPhone XR -- which were unveiled in September.

Among Apple suppliers that reported disappointing sales for November, the November consolidated sales of Largan Precision Co. fell 23.1 percent from a month earlier to NT$40.07 billion. Its November sales also dropped 28.57 percent from a year earlier and the company said sales for December could continue to fall.

According to Hon Hai, its communications device division made the biggest contribution to a month-on-month increase in November sales, ahead of the consumer electronics and computing divisions.

In the first 11 months of this year, Hon Hai posted NT$4.68 trillion in consolidated sales, up 15.99 percent from a year earlier.

Based on its aggregate sales of about NT$1.19 trillion for October and November, the market expects Hon Hai's sales for the fourth quarter to top NT$1.7 trillion, a new quarterly high, on the back of peak season effects.

"But, I remain cautious about Hon Hai as there are no signs that Washington and Beijing will resolve their trade disputes anytime soon as the manufacturer has a broad production base in China and could feel the pinch from the trade tension," Tang said.

"It was no surprise that foreign institutional investors dumped the stock in recent sessions," Tang said. "We have to watch closely when foreign institutional investors change their strategies by shifting to the buy side."

Foreign institutional investors sold a net 69.35 million Hon Hai shares in the previous four trading sessions after net sales of 11.41 million shares Monday. After the sell-off over the four days, foreign institutional investors have cut their stake in Hon Hai from 42.31 percent to 41.87 percent.

(By Chung Jung-feng and Frances Huang)