FIH Mobile Ltd (富智康), assembler of Xiaomi Corp (小米) smartphones, surged the most in three months in Hong Kong trading yesterday after forecasting that profit would more than double.
The stock climbed 11.6 percent to an intraday high of HK$5, the most since March 20, before retreating to close at HK$4.78, up 6.7 percent from Wednesday.
FIH Mobile, a unit of Foxconn Technology Group (富士康科技集團), has seen its profits surge, as fast-growing Chinese smartphone vendors, such as Xiaomi and Huawei Technologies Co (華為), rely on the company’s factories to produce their devices.
Photo: David Chang, EPA
The manufacturer also expects to assemble its first Indian-made smartphone this year and to set up multiple plants in the country.
Stronger component sales, mostly driven by metal casings used by Chinese smartphone makers, are also helping the company’s earnings, Andrew Lin and Xia Xiao at China International Capital Corp (CICC, 中金公司) wrote in a note to clients.
FIH’s margins should expand, as the company has upgraded to produce higher value components, they wrote.
CICC raised its rating on the stock to “conviction buy,” from “buy.”
Net income is forecast to reach between US$120 million and US$135 million for the six months ending June 30, the company said in a statement to the Hong Kong Stock Exchange on Wednesday. That is as much as 20 percent higher than the average of analysts’ estimates compiled by Bloomberg.
First-half sales are expected to surge 64 percent to more than US$3.75 billion, FIH said in the statement, compared with analysts’ average estimate of US$3.4 billion. Gross profit is predicted to rise 59 percent to about US$225 million, it said.
New clients such as Guangdong Oppo Electronics Co (廣東歐珀), OnePlus (一加) and India’s Micromax Informatics are helping offset a slowdown at former mainstays such as Nokia Oyj and Sony Corp, FIH chairman Vincent Tong (童文欣) said in an interview last month.
Taipei-based Hon Hai Precision Industry Co (鴻海精密), the largest member of Terry Gou’s (郭台銘) Foxconn Technology Group, owns about 70 percent of FIH.
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