Analysts blase over HTC’s stock rally amid low sales

Staff writer, with CNA

Wed, Sep 18, 2013 - Page 14

Shares of smartphone vendor HTC Corp (宏達電) staged a rebound yesterday, driven by foreign institutional buying of the stock during the past six sessions, dealers said.

Despite the rally, market sentiment toward the stock remained cautious, amid concerns over HTC’s third-quarter sales and the stock’s movement in the future, dealers said.

HTC shares rose 2.19 percent to close at NT$140 (US$4.71), with 16.26 million shares changing hands. The TAIEX ended down 0.07 percent at 8,249.78.

“The gains were technical in nature after the stock’s recent heavy losses. The news of foreign institutional buying simply prompted investors to pick up bargains during the session,” Grand Fortune Securities (福邦證券) analyst Chen Wei-tai said.

According to the Taiwan Stock Exchange (TWSE), foreign institutional investors bought almost 16 million HTC shares in the past six months, taking a 23.15 percent stake in the smartphone vendor, up from 22.04 percent on Sept. 9.

On Monday alone, foreign institutional investors bought a total of 3.32 million HTC shares, TWSE statistics showed.

“I think foreign investors were basically bargain-hunting and bought into the stock only for trading purposes,” Chen said.

In the first eight months of the year, the stock suffered a 47.31 percent decline, the steepest loss among the more than 800 stocks listed on the main board, dropping to NT$156.50 amid disappointing sales data for July and last month.

After a 47.31 percent drop over the past eight months, HTC shares continued to trend lower and closed at NT$137 on Monday, as investors rushed to dump the stock after the company confirmed that it laid off about 20 percent of its 150 employees at its US operations.

“Investors’ confidence has been hit hard by HTC’s gloomy sales reports for July and August, and escalating worry that the company will not achieve its third-quarter sales guidance of NT$50 billion to NT$60 billion,” Chen said.

Credit Suisse has forecast that the company’s sales could rise this month driven by its HTC Butterfly S and the HTC One mini.

However, Chen warned against buying HTC stock unless it posts positive sales numbers.