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Hon Hai shares extend gains after Q1 results, dividend plan

Hon Hai shares extend gains after Q1 results, dividend plan

Taipei, May 19 (CNA) Shares of Hon Hai Precision Industry Co. (??) moved higher Tuesday morning, extending gains from a session earlier, as investors remained excited by the company's first quarter results announced over the weekend, dealers said. The buying was also fueled by a proposed cash dividend payout for 2014 that would be the highest ever from the world's largest contract electronics maker, they said.
The gains posted by Hon Hai shares were a big factor in advances made by the overall bellwether electronics sector and the broader market Tuesday morning, dealers said. As of 11:46 a.m., shares of Hon Hai had added 1.78 percent to NT$98.50 (US$3.23), with 71.23 million shares changing hands, after closing 3.97 percent higher on Monday. The weighted index on the Taiwan Stock Exchange was up 1.07 percent at 9,708.87, and the electronics sub-index was up 1.04 percent at 376.79. "Judging from Hon Hai's first quarter results, the company made a significant improvement from the same period of last year on the back of higher profit margins resulting from a better production mix," Hua Nan Securities analyst Henry Miao said. In the January-March period, Hon Hai, an assembler of Apple Inc.'s iPhones and iPads, posted a net profit of NT$30.39 billion, up 55.48 percent from a year earlier but down 46.42 percent from a quarter earlier due to slow season effects. It was the highest first quarter net profit ever recorded by the company. Hon Hai had earnings per share of NT$2.05 for the quarter, up from NT$1.33 recorded a year earlier. Analysts attributed the growth to strong global demand for Apple's iPhone 6 and iPhone 6 Plus. Hon Hai's gross margin rose 1.1 percentage points from a year earlier to 7.14 percent in the first quarter, the fourth consecutive quarter for which the company reported a gross margin higher than 7 percent. Its operating margin also rose 1.44 percentage points from a year earlier to 3.81 percent. "Based on the first quarter EPS, Hon Hai is expected to post no less than NT$9.5 in EPS for 2015 as a whole," compared with NT$8.85 in 2014, the analyst said. Miao said it was no surprise that foreign institutional investors rushed to pick up the stock Monday. According to the TWSE, foreign institutional investors bought a net 71.77 million Hon Hai shares on Monday, the largest net buy of any stock listed on the main board. Monday's net buy of the stock by foreign investors was the biggest so far this year. At a board meeting held Friday, Hon Hai proposed to issue a dividend of NT$4.3 per share for 2014, consisting of a cash dividend of NT$3.8 per share and a stock dividend of NT$0.5 per share. If approved by shareholders, the cash dividend will be the largest in the company's history and would require a total cash outlay of NT$56.21 billion. "In the wake of the cash dividend proposal, investors continued their buying of the stock," Miao said. "But it's possible that Hon Hai shares will soon encounter strong technical resistance ahead of the NT$100 mark." Miao said that as the life cycles of the iPhone 6 and iPhone 6 Plus, which were unveiled last September, are coming to an end in the second quarter, Hon Hai is expected to see its results for the April-June period fall from the previous quarter before sales momentum picks up again in the second half of this year. (By Jalen Chung and Frances Huang)


Updated : 2021-09-17 08:53 GMT+08:00