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Hon Hai shares down despite strong October sales numbers

Hon Hai shares down despite strong October sales numbers

Taipei, Nov. 11 (CNA) Shares of Hon Hai Precision Industry Co., an assembler of iPhones and iPads for Apple Inc. came under pressure Wednesday morning as investors ignored the Taiwanese manufacturer's strong sales data for October, dealers said. The current selling largely reflected a tumble of Apple shares on Wall Street overnight after Credit Suisse cut its forecast of iPhone shipments for 2016, while the weakness of Hon Hai shares also came amid fears over further volatility on the local main board, they said. As of 10:46 a.m., shares of Hon Hai had fallen 1.07 percent to NT$83.60 (US$2.56) with 28.43 million shares changing hands. The weighted index on the Taiwan Stock Exchange was down 1.05 percent at 8,447.06 points. "Investors here were spooked by the sharp sell-off in Apple shares on the U.S. market overnight. It was no surprise that they left Hon Hai's October sales behind," Ta Ching Securities analyst Andy Hsu said. "After the launch of the latest iPhones -- the iPhone 6s and iPhone 6s Plus in September -- the market had previously anticipated Hon Hai would get a boost in its shipments for the fourth quarter," Hsu said. "And now, investors have set their sights on 2016, but the cut in the iPhone shipment estimate for 2016 has hurt market sentiment." Credit Suisse cut its forecast of iPhone shipments for 2016 by 20 million units to 222 million. The brokerage said that the downgrade in shipments forecast was driven by weak demand for the new iPhone 6s. After the cut, Apple shares closed down 3.15 percent overnight. In October, Hon Hai posted NT$502.96 billion in consolidated sales, up 9.13 percent from a month earlier and also up 7.24 percent from a year earlier. The October data represented the third largest monthly sales figure in company history, only trailing the NT$515.57 billion recorded in December 2014 and the NT$514.79 billion registered in November 2014. Hon Hai said that its three major product categories -- consumer electronics, computing and communications devices -- all rose from a month earlier in October. After Apple unveiled its latest iPhones, Hon Hai entered a peak season in the fourth quarter as the U.S. consumer electronics giant rushed to build up its inventories to meet global demand. As a result, Hon Hai, which has taken all of the orders for the assembly of the iPhone 6s Plus and 50 percent of the orders for the assembly of the iPhone 6s, witnessed its production rise in its plants located in Zhengzhou, Henan Province and Shenzhen, Guangdong Province. In the first 10 months of this year, Hon Hai's consolidated sales totaled NT$3.56 trillion, up 11.75 percent from a year earlier. Market analysts said that Hon Hai is expected to post more than NT$1.5 trillion in consolidated sales for the fourth quarter, the highest quarterly revenue for the company in 2015. "Despite the rosy sales forecast for the fourth quarter, concerns over iPhone shipments for 2016 have been running deeper," Hsu said.
"More importantly, Hon Hai shares have been affected by the weakness of the broader market. Investors fear that foreign institutional investors will continue to dump more local large-cap stocks, like Hon Hai." (By Jalen Chung and Frances Huang)


Updated : 2021-09-24 12:00 GMT+08:00