‘Apple concept stocks’ extend gains amid optimism


CNA

TAIPEI — Shares of companies in the Apple supply chain extended their momentum in Taipei yesterday morning on optimism over their earnings outlook after Apple reported better-than-expected results in its fiscal first quarter, dealers said.

Many investors anticipate the U.S. consumer electronics giant will post even higher earnings in the current quarter with the release of the iPhone 4S in China and the targeting of the iPad3 launch for the quarter as well, they said.

As of 11:39 a.m., shares of Hon Hai Precision Industry Inc., which churns out iPhones and iPads from its broader global production base for Apple, were up 1.81 percent to NT$95.50 (US$3.23), with 65.25 million shares changing hands.

Casing supplier Catcher Technology had gained 3.91 percent to NT$186.00 and rival Foxconn Technology Co. had risen 7 percent, the maximum daily increase allowed on the Taiwan stock exchange, to NT$116.00.

Integrated circuit packaging service provider Kinsus Interconnect Technology Corp. had also gained the maximum 7 percent to NT$96.00.

The benchmark weighted index was up 0.92 percent at 7,475.24.

“These stocks are playing catch-up after lagging during the long Lunar New Year holiday, when Apple reported stunning results in the last quarter and its shares hit a new high,” Grand Cathay Securities analyst Mars Hsu said.

Apple reported last week that its net profit in the quarter ending Dec. 31 hit a record high of US$13.1 billion (NT$388 billion) after it unveiled the iPhone 4S, which was believed to be the last project of the company’s late co-founder Steve Jobs.

During the October-December period, Apple shipped 37 million smartphones and ranked as the world’s largest smartphone vendor with a 23.9 percent share, according to market advisory firm Strategy Analytics.

Hsu said the significant earnings growth during the period prompted many investors to expect even stronger results during the current quarter, which will continue to boost the profitability of its Taiwanese suppliers.

In particular, Hsu said, now that the iPhone 4S has been introduced to the huge Chinese market, Apple’s smartphone shipments are expected to grow further, and the planned launch of iPad 3 will serve as an additional engine of growth.

“I suspect the current buying in these Apple concept stocks comes from foreign institutional investors who are rebuilding their portfolios after the New Year holiday,” Hsu said. “They tend to target stocks, like Apple suppliers, which have good potential to grow.” Foreign institutional investors were net buyers of 57.34 million Hon Hai Precision shares Monday. “I expect foreign institutional interest will continue for the rest of the week before profit taking sets in,” Hsu said.