A succession plan for when Hon Hai Precision Industry Co (鴻海精密) chairman Terry Gou (郭台銘) steps down, among other major issues, is expected to dominate the firm’s investors’ conference tomorrow, analysts said.
It will be the first time that Hon Hai has held a conference for investors since the firm’s initial public offering on the Taiwan Stock Exchange on June 18, 1991.
Hua Nan Securities Investment Management Co (華南投顧) chairman David Chu (儲祥生) on Saturday said that Hon Hai is expected to detail its succession plan and assuage concerns over how the company will evolve without Gou, who dictates the company’s day-to-day operations.
“Investors have concerns about Hon Hai’s future direction in global business development, and the upcoming conference is a good chance for Hon Hai to face investors directly,” Chu said.
On April 17, Gou declared his intention to compete for the Chinese Nationalist Party’s (KMT) nomination in next year’s presidential election.
Gou has been nominated as a Hon Hai board member, but said he would not seek re-election as chairman at the firm’s annual general meeting on June 21.
The other eight board member nominees are Lu Fang-ming (呂芳銘), Young Liu (劉揚偉), Li Jie (李傑), Lu Sung-ching (盧松青) and Tai Jeng-wu (戴正吳), as well as independent directors Wang Guo-cheng (王國城), Kuo Tei-wei (郭大維) and Kung Kuo-chuan (龔國權), Hon Hai said.
Since Gou announced his presidential bid, shares of Hon Hai have dropped more than 20 percent amid concerns over how the firm will operate without Gou.
Alex Huang (黃國偉), an analyst with Mega International Investment Services Corp (兆豐投顧), said he expects the upcoming board of directors to lead collectively after Gou departs from day-to-day operations.
However, an analyst who asked not to be named, said that as Gou still holds a 9.63 percent stake in the firm, he is unlikely to retreat from the frontlines completely.
At a time of escalating trade tensions between the US and China, investors are also expected to raise concerns over shipments from Hon Hai’s large production base in China, where the iPhone assembler employs more than 1 million workers, First Capital Management Inc (第一金投顧) chairman Edward Chen (陳奕光) said.
It would be possible for Hon Hai to diversify its production by relocating its resources from China to other markets with large populations, such as India, Vietnam, Brazil and Thailand, Chen said.
Huang said that investors would pay close attention to how Hon Hai deals with a possible iPhone production vacuum when it moves some of its production lines from China to other countries.
Last month, Hon Hai said that it had set up a task force to monitor the fast-changing market amid the US-China trade dispute.
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