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Shares of Pegatron rise on Q1 results

Shares of Pegatron rise on Q1 results

Taipei, May 8 (CNA) Shares of Pegatron Corp. (??), one of the Taiwanese suppliers to Apple Inc., moved higher Friday morning after the contract electronics maker reported higher earnings for the first quarter of the year despite the usual slow season, dealers said. However, Pegatron gains appeared limited as investors took cues from the company's cautious outlook toward the second quarter at a time when global demand for communications devices is slowing, dealers said. As of 11:05 a.m., shares of Pegatron had climbed 0.98 percent to NT$92.80 (US$3.02), off an early high of NT$94.80, with 10.13 million shares changing hands. The weighted index on the Taiwan Stock Exchange was up 0.21 percent at 9,724.70 points. "Pegatron benefited from large orders from Apple for assembly of the iPhone 6, the latest model, which helped improve the Taiwanese manufacturer's product portfolio and strengthen its bottom line," KGI Securities analyst Phil Chu said. "The results were very impressive since Pegatron beat the slow season in the first quarter," Chu said. At an investor conference Thursday, Pegatron reported NT$6.33 billion in net profit for the January-March period, up 11.4 percent from a quarter earlier and 131.6 percent year-on-year. Its first-quarter earnings per share stood at NT$2.48, compared with NT$2.38 in the previous quarter, and NT$1.18 in the same period of last year. On the strength of a better portfolio mix, Pegatron's first-quarter gross margin rose to 6.2 percent from 5.7 percent the previous quarter, its operating margin climbed to 3.2 percent from 3.0 percent, and its net margin grew to 2.3 percent from 1.6 percent. Chu said communications devices weighed more in Pegatron's sales and offset the effects of a slowing personal computer market, as the iPhone 6 remained popular in the world market in the first quarter of this year after its release last September. Pegatron said communications devices accounted for 63 percent of its total sales in the first quarter, compared with 38 percent in the previous quarter, while computing devices made up 16 percent of its total revenue, compared with 31 percent in the fourth quarter of last year. "But the upturn of Pegatron shares were capped this morning as investors had been buying into the stock aggressively since early April in anticipation of good first-quarter results," Chu said. "Investors have now shifted their attention to Pegatron's cautious forecast for the second quarter." Pegatron has projected a 25 percent sequential decline in consolidated sales for the second quarter since sales in its communications device division are expected to fall 30-40 percent. Market analysts said the company's sales are likely to drop in the second quarter because Apple is not scheduled to launch any new products in that period. "But Pegatron may benefit from the peak season in the second half of this year, in particular, in the fourth quarter," Chu said. "So even if the stock suffers some profit taking after its recent strong showing, investors may find a good buying point at around NT$91." (By Han Ting-ting and Frances Huang)


Updated : 2021-09-20 23:26 GMT+08:00