Shares of Hon Hai jump on record Oct. sales


CNA

TAIPEI — Shares of Hon Hai Precision Industry Co., the world’s largest contract electronics maker, staged a rally yesterday after the company reported record high sales for October, dealers said.

The buying also reflected a technical rebound after the stock was hammered by concerns over the debt crisis in the eurozone in the previous session, they said.

At the end of trade, Hon Hai Precision, which assembles iPhone and iPad for Apple, closed up 4.05 percent to NT$82.3. Hon Hai reported Thursday NT$295.54 billion in non-consolidated sales for October, up 33.26 percent from September. The October figure was also a monthly sales record in the company’s history.

In the first 10 months of this year, Hon Hai’s non-consolidated sales rose 17.01 percent year-on-year to NT$2.15 trillion.

“The October sales largely reflected the popularity of Apple’s iPhone 4S,” Grand Cathay Securities analyst Mars Hsu said. “The figure seems to have calmed down many investors who had been worried that Apple’s shipments would be affected by the weakening economic fundamentals.”

Since the launch of the iPhone 4S in early October, it has attracted tremendous buying in the global market as many consumers view the device as the last work of the late Apple co-founder Steve Jobs.

Judging from the warm market response to the new iPhone, Apple could reach its sales target of 27 million units for the fourth quarter of this year, Hsu said.

“Some market analysts have even forecast that Apple would sell 30 million to 35 million iPhones in that quarter,” he said.

In addition, Hsu said, Hon Hai’s October sales figure included revenue from a plant in Mexico that it acquired recently from Cisco.

The US$44.95 million transaction was completed last month.

However, Hsu said Hon Hai may be affected in the remainder of the fourth quarter by the interruption of the PC supply chain caused by serious flooding in Thailand. The supply of hard disks for desktop PCs is most likely to be hardest hit, he said.

“As desktop PCs account for about 30 percent of Hon Hai’s sales, a shortage in hard disks could pose a threat to Hon Hai’s revenue,” he said.

The analyst said investors should remain cautious about possible technical hurdles as the stock moves closer to NT$85.00.