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Hon Hai shares down as Q2 results fail to surprise

Hon Hai shares down as Q2 results fail to surprise

Taipei, Aug. 14 (CNA) Shares of Hon Hai Precision Industry Co. moved lower Wednesday morning after the world's largest contract electronics maker posted second quarter results that did nothing more than fall within market expectations, dealers said. The downside was limited, however, as many investors hoped that Hon Hai, which assembles iPhones and iPads for Apple Inc., will benefit from the anticipated launch of new products by the U.S. consumer electronics giant in the coming months, they said. As of 11:26 a.m., shares of Hon Hai had fallen 0.51 percent to NT$78.70 (US$2.62), off an early low of NT$78.40, with 21.63 million shares changing hands. The weighted index on the Taiwan Stock Exchange was down 0.65 percent at 7,934.52. "Because Hon Hai's higher net profit for the April-June period was widely expected, investors moved to sell this morning on the results announcement to take advantage of the stock's (2.06 percent) gains yesterday," MasterLink Securities analyst Tom Tang said. In a statement released Tuesday, Hon Hai said it made NT$16.98 billion in net profit in the second quarter, up 3.8 percent from the first quarter. Its NT$1.3 in second quarter earnings per share were slightly higher than its EPS of NT$1.26 a quarter earlier. Hon Hai's consolidated sales for the second quarter rose 10.7 percent from the first quarter to NT$895.62 billion, while its gross and operating margins for the April-June period stood at 5.8 percent and 2.08 percent, respectively, up 0.12 percentage points and 0.36 percentage points from the first quarter. "Apple did not launch new products in the second quarter, but Hon Hai still managed itself well to report an improving bottom line. I think the company has made plenty of effort to diversify its customer portfolio to offset the impact from Apple," Tang said. Foreign institutional investors were less convinced. UBS Securities and HSBC Securities said Hon Hai's second quarter operating margin was below foreign brokerages' estimate of 2.5 percent because of lower foreign exchange gains and higher taxes than a quarter earlier. Though foreign brokerages said the second quarter profit margin could depress Hon Hai's share price, Tang said the stock was likely to rise on hopes that an increase in orders from Apple would boost its shipments in the second half of the year. "Foreign institutional investors prefer to release negative leads to place downward pressure on a certain stock, but then act in the opposite way to pick up bargains when the stock falls," Tang said. "It will take time to see what foreign brokerages do next." On Tuesday, foreign institutional investors were net buyers of 18.21 million Hon Hai shares to hold a 42.03 percent stake in the stock, and Tang said there was still room for foreign investors to raise their holdings in the company. Tang said his brokerage still had a "buy" rating on Hon Hai shares. (By Jalen Chung and Frances Huang)


Updated : 2021-03-08 03:44 GMT+08:00