Wed, Aug 14, 2013 - Page 14 News List

Hon Hai profit rises above expectations

By Lisa Wang  /  Staff reporter

Hon Hai Precision Industry Co (鴻海精密) yesterday posted annual growth of almost 41 percent in net profit last quarter after booking NT$6.94 billion (US$231.6 million) in asset gains.

The company’s net profit soared to NT$16.98 billion in the three-month period ending in June, compared with NT$12.06 billion in the same period last year, according to a financial statement released yesterday. The NT$6.94 billion in asset gains is a huge turnaround from a year ago, when Hon Hai posted NT$4.8 billion in asset losses.

“The figures exceeded the market’s expectations,” Fubon Securities Co (富邦證券) analyst Arthur Liao (廖顯毅) said,

Hon Hai’s second-quarter net profit represented a sequential quarterly growth of 3.85 percent from NT$16.35 billion.

Its gross margin fell to 5.8 percent last quarter from the 6.05 percent seen a year ago, but was an improvement from the first quarter’s 5.68 percent.

“It is good to see Hon Hai’s gross margin rise further from the first quarter,” Liao said.

“FIH Mobile Ltd (富智康) played a key role in Hon Hai’s improved quarterly profits,” Liao said.

FIH, Hon Hai’s handset manufacturing arm, had been dragging down earnings until recently.

FIH, which makes smartphones for China’s Xiaomi Corp (小米), on Monday posted US$17.23 million in net profits for the first half of this year, reversing losses of US$224 million the previous year.

Liao said he expects Hon Hai to regain growth momentum as it benefits from sales of Apple Inc’s new iPhone 5S and the low-cost iPhone Mini, to be launched later this year.

He also forecast that Hon Hai would report at least NT$300 billion in monthly revenue for the third and fourth quarters.

Liao maintained that the company’s annual revenue would drop from last year’s NT$3.9 trillion, but that it would decrease by 9 percent instead of the 15 percent he had estimated previously.

Liao yesterday upgraded his rating on Hon Hai stock to “add” from “reduce” and raised his target price to NT$93 from NT$59. The figure implies a 17.57 percent uptick from Hon Hai’s closing price of NT$79.10 yesterday.

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