Hon Hai shares ini­tially up on May sales, fall on profit-tak­ing

The China Post - - TAIWAN BUSINESS -

Shares of Hon Hai Pre­ci­sion In­dus­try Co. ( ) ini­tially moved higher Thurs­day morn­ing af­ter the com­pany re­ported bet­ter-thanex­pected sales for May, but prof­ittak­ing emerged to erode the early gains, deal­ers said.

While the mar­ket has high hopes that the world’s largest con­tract elec­tron­ics maker will re­port the high­est sales ever recorded for the sec­ond quar­ter, the stock has en­coun­tered strong tech­ni­cal re­sis­tance af­ter it moved closer to NT$97 ( US$3.13), the deal­ers said.

As of 10:58 a.m., shares of Hon Hai had fallen 0.63 per­cent to NT$95.00 off an early high of NT$96.70, with 20.94 mil­lion shares chang­ing hands. The weighted in­dex on the Tai­wan Stock Ex­change was down 0.02 per­cent at 9,296.32 points.

The stock opened at NT$96.30, up from the pre­vi­ous close of NT$95.60, and rose to an early high in the wake of the May sales re­port be­fore some in­vestors locked in their ear­lier gains to push down the share price, the deal­ers said.

“Hon Hai shares closed up 2.58 per­cent Wed­nes­day, serv­ing as one of the driv­ers that boosted the broader mar­ket. It was no sur­prise that in­vestors pock­eted their gains soon af­ter the stock opened higher to­day,” KGI Se­cu­ri­ties an­a­lyst Phil Chu said.

Ac­cord­ing to the TWSE, for­eign in­sti­tu­tional in­vestors bought a net 13.60 mil­lion Hon Hai shares Wed­nes­day, the sec­ond-largest net buy amount among the listed com­pa­nies on the main board.

Higher-than-ex­pected

May Sales

“The ini­tial gains to­day re­flected Hon Hai’s higher-than-ex­pected May sales at a time when the global high­tech sec­tor has been un­der the slowsea­son ef­fect,” Chu said.

In a state­ment re­leased Wed­nes­day, Hon Hai, an as­sem­bler of iPhones and iPads, said that it posted about NT$301.6 bil­lion in con­sol­i­dated sales for May, down 14.43 per­cent from a month ear­lier due to the slow-sea­son ef­fect, as de­mand for the iPhone 6 and iPhone 6 Plus was on the decline, with the life cy­cle of the lat­est Ap­ple smart­phone mod­els com­ing to an end.

May Sales Rose 12.55% Y-O-Y

How­ever, Hon Hai’s lat­est monthly sales rose 12.55 per­cent from a year ear­lier to hit the high­est-ever recorded for May. Mar­ket an­a­lysts were im­pressed that Hon Hai was able to re­port more than NT$300 bil­lion in con­sol­i­dated sales for May. Hon Hai said that de­mand for con­sumer elec­tron­ics re­mained strong in May, while ship­ments of com­mu­ni­ca­tions and com­put­ing de­vices stayed flat dur­ing the month.

NT$950-NT$955 bil. in Rev­enue

for Q2: An­a­lyst

Mar­ket an­a­lysts said that Hon Hai could con­tinue to re­port about NT$ 300 bil­lion in con­sol­i­dated sales for June, and it is pos­si­ble for the elec­tron­ics gi­ant to post NT$ 950 bil­lion- NT$ 955 bil­lion in rev­enue for the sec­ond quar­ter, the high­est level ever recorded for the April- June pe­riod.

Chu said that since Ap­ple Inc. will not un­veil the next gen­er­a­tion of the iPhone un­til Septem­ber, Hon Hai’s sales growth mo­men­tum is un­likely to pick up un­til then.

“So I ex­pect that Hon Hai shares will fall into con­sol­i­da­tion mode in the near term be­fore Ap­ple’s or­ders give a sig­nif­i­cant boost to the firm’s ship­ments,” Chu said, adding that the stock could move be­tween NT$ 93 and NT$ 97.

In the first five months of this year, Hon Hai’s con­sol­i­dated sales rose 15.43 per­cent from a year ear­lier to NT$ 1.67 tril­lion.

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