Hon Hai Precision Industry Co (鴻海精密), assembler of Apple Inc’s iPhone and iPad, dropped to the daily limit in Taipei trading after posting first-quarter profit that missed analysts’ estimates.
Hon Hai stock fell 7 percent, its biggest decline since November 2008, to close at NT$92.40. Shares opened at the lower limit and stayed there the whole session The Taipei-based company on Saturday posted net income of NT$14.9 billion (US$510 million), about 31 percent less than the NT$21.5 billion average of 10 analysts’ estimates.
Hon Hai was downgraded at UBS AG and Fubon Financial Holding Co (富邦金控), which cited worse-than-expected profit margins amid wage increases and losses at its Hong Kong-listed unit.
Hon Hai gets 37 percent of its revenue from Apple, and its profitability usually moves in the opposite direction to Apple’s, which posted its highest operating margin in more than a decade.
“Hon Hai’s margins from making Apple products weren’t as high as in previous quarters, due in part to lower yields for the New iPad,” said Arthur Liao, who downgraded the stock to sell from buy at Fubon Financial.
Losses at Foxconn International Holdings Ltd (富士康控股) may also have hurt earnings, Liao said.
The stock has added 11 percent this year, beating a 6 percent advance in the benchmark TAIEX.
UBS analyst Arthur Hsieh (謝宗文) lowered Hon Hai to sell from buy and reduced his share price target by 25 percent, citing “slower-than-expected margin recovery.”