Shares of local manufacturers in Apple Inc’s supply chain generally moved higher yesterday morning after the US-based electronics giant reported better-than-expected sales of its new iPhones on their first weekend on the market, dealers said.
The strong demand led many investors to hope that the so-called “Apple concept stocks” will see shipments rise in the third quarter and even peak in the fourth quarter, they said.
As of 11:46am, smartphone camera lens supplier Largan Precision Co (大立光) stock had added 2.01 percent to NT$1,015, while Pegatron Corp, which assembles iPhones, had risen 1.27 percent to NT$44 and shares of Hon Hai Precision Industry Co (鴻海精密), which assembles both iPhones and iPads, had gained 0.52 percent to NT$76.60.
The weighted index on the Taiwan Stock Exchange was down 0.16 percent at 8,279.53.
“I expect Largan to be one of the biggest beneficiaries of the strong demand for the two new iPhone models because it supplies lenses for both of the new iPhones,” KGI Securities Co (凱基證券) analyst Eason Lee said.
“It may see consolidated sales grow 12 to 13 percent in the third quarter from a quarter earlier and grow another 10 percent sequentially in the fourth quarter to reach a peak for the year,” the analyst said.
Lee said it was no surprise that Largan, the most expensive stock in the local bourse, rose above the NT$1,000-mark yesterday for the first time since Sept. 16.
Apple announced that it sold more than 9 million units of its two new smartphone models — the iPhone 5S and the multicolored iPhone 5C — over the weekend after they went on sale on Friday.
The first-weekend sales beat the market’s estimate of 6 million to 8 million units and were also higher than the first-weekend sales of the iPhone 5 — the predecessor of the iPhone 5S — last year.
“Apple has benefited from its new strategy of launching two models at the same time, which has broadened its customer pool,” Lee said. “In addition, Apple added China’s market to the first round of sales this time to boost buying interest.”
In a statement, Apple chief executive Tim Cook described the results as the company’s best iPhone launch yet, with the company setting a new company record for first-weekend sales.
“Riding the wave of strong iPhone sales, local suppliers are expected to report sales growth, and growth momentum should continue to the end of this year and even into the first quarter of next year,” Lee said.
Hon Hai could return to positive sales growth this month and beyond after suffering a 6.59 percent month-on-month decline in sales last month, he added.
Hon Hai’s sales for last month totaled NT$280.4 billion (US$9.5 billion), but monthly sales should end up higher than NT$300 billion for the rest of the year, Lee said.
However, the analyst cautioned that higher sales to Apple will not necessarily translate to higher profitability for supply-chain firms.
“There are concerns that as shipments to Apple increase, the average selling prices of these domestic suppliers could be depressed. I am afraid that their gross margins will be affected accordingly,” Lee said.
“I suggest that investors buy these Apple concept stocks simply for trading purposes for the time being. Do not hold on to them for too long,” he said.