TAIPEI–Shares of Hon Hai Precision Industry Co. (�E��) initially moved higher Thursday morning after the company reported better-than-expected sales for May, but profit-taking 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 high-tech sector has been under the slow-season 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.