Hon Hai Precision Industry Co (鴻海精密) on Friday reported its sales for last month fell to a new 17-month low, with market analysts attributing the decline to the impact from a product transition period.
The world’s largest contract electronics maker, which assembles iPads and iPhones for Apple Inc, posted NT$260.22 billion (US$8.67 billion) in consolidated sales, down 17.91 percent from June and also down 13.33 percent from a year earlier.
Analysts said before Apple launches the next generation of the iPhone and iPad, Hon Hai no doubt felt the pinch from an unfavorable product transition period last month, when the US-based consumer electronics giant slowed down its pace of orders.
As a result, the Taiwanese firm reported a double-digit month-on-month decline in consolidated sales last month, they said.
In addition, analysts said, the drop in sales reflected a high comparison base seen in June, when Hon Hai’s consolidated sales totaled NT$316.99 billion, up 18.3 percent from May. The June figure has been the highest monthly level so far this year.
Among Hon Hai’s three major product categories, consumer electronics suffered a relatively steep decline in sales, while consumer purchases of computing and communications devices appeared relatively stable.
Despite the steep drop in the parent company’s consolidated sales last month, Hon Hai’s subsidiary FIH Mobile Ltd (富智康), which runs a broad production base in China, enjoyed stable shipments as the unit’s clients, such as Chinese smartphone vendors Xiaomi Corp (小米) and Huawei Technologies Co (華為) and US-based Amazon, kept placing orders for production of their new smartphone models.
In the first seven months of this year, Hon Hai’s consolidated sales rose 0.82 percent from a year earlier to NT$2.23 trillion.
Analysts said that Hon Hai will see its sales growth momentum pick up starting from this month to push up revenue for the third quarter as Apple’s orders stream in at a larger pace ahead of the launch of the new iPhone and iPad, likely next month.
They added that sales are expected to grow even more significantly in the fourth quarter.
Deutsche Securities, has a target price of NT$113 on Hon Hai shares, said the company’s consolidated sales this quarter are expected to grow 13 percent from last quarter, and revenue for next quarter could rise 39 percent from this quarter.
On Friday, shares of Hon Hai fell 0.97 percent to close at NT$102.5 in Taipei trading.
Bank of America Merrill Lynch said Hon Hai’s relatively low valuation has made the stock attractive to investors, and the brokerage has listed Hon Hai as a top pick among the local suppliers to Apple.
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