Hon Hai Precision Industry Co (
Its shares surged to a three-year high yesterday.
Net income was NT$5.4 billion ($158 million) in the three months ending June 30, from NT$4.1 billion a year ago.
Sales rose 6 percent to NT$61.3 billion from NT$57.5 billion.
Hon Hai boosted profit and sales as bigger rivals Flextronics International Ltd and Solectron Corp posted shrinking revenue and widening losses.
The company, which makes PlayStation 2 video-game consoles for Sony Corp and personal computers for Hewlett-Packard Co, has moved more production to China.
"This is a very cost-conscious company," said Paul Tsai, who counts shares in the company among the equivalent of US$4.2 billion that he helps manage for International Investment Trust Co (
"You can see that from visiting the company's headquarters," he said.
Hon Hai's headquarters are an industrial area of Taipei, with a front entrance that is reached by passing a goods-loading dock.
The company doesn't hold quarterly press conferences and doesn't post its financial reports on an English-language Web site, unlike other major companies such as Taiwan Semiconductor Manufacturing Co (
Hon Hai shares rose by the 7 percent daily limit, or NT$9, to NT$141 yesterday, their highest close since Sep. 26, 2000.
The shares have gained 41 percent this year, against a 27 percent increase in the TAIEX.
"Good execution" enabled Hon Hai to increase profit by more than sales in the second quarter, spokesman Edmund Ding (
* Net income was NT$5.4 billion in the three months ending June 30, from NT$4.1 billion a year ago.
* Sales were up 6 percent to NT$61.3 billion from NT$57.5 billion.
* Its shares have gained 41 percent this year, against a 27 percent increase in the TAIEX.
The company's low-cost manufacturing base and global distribution network, which includes operations in Eastern Europe and North America, have helped it win orders, analysts said.
"The bigger companies have more assets in the US and Europe," said David Toh, an analyst with Lehman Brothers Asia Ltd.
"The trend is to shift more production to Asia. Hon Hai is in a better position," he said.
Hon Hai's second-quarter sales rose even as the SARS outbreak disrupted business in the second quarter and Sony, one of the company's biggest customers, shipped fewer PlayStation 2s.
Hon Hai's annual sales grew more than 10-fold in the five years to 2002 as the company benefited from a trend of brand-name electronics companies outsourcing manufacturing to reduce costs.
Hon Hai has been increasing production of desktop computers, Toh said. The company makes Apple Computer Inc's G5 desktops and Acer Inc's latest Aspire home-entertainment PCs, he said.
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