Bloomberg News

Hon Hai Rises to 13-Month High After Profit: Taipei Mover

March 28, 2012

Hon Hai Precision Industry Co. (2317) rose to its highest level in more than 13 months in Taipei trading after reporting record profit and revenue buoyed by sales of Apple Inc.’s iPhone and iPad.

Hon Hai climbed 4.6 percent to close at NT$113, the highest level since February 2011. More than 100 million shares traded, about 2.5 times the daily average for the past 90 days. The stock was the biggest contributor to the benchmark Taiex (TWSE) index’s 0.1 percent gain.

The company yesterday reported fourth-quarter net income which climbed 64 percent to NT$35 billion ($1.18 billion) surpassing each of the nine analysts’ estimates compiled by Bloomberg, and the average of NT$26.6 billion. Founder Terry Gou and Foxconn Technology Group, of which Hon Hai is the flagship, yesterday announced an agreement to invest 133 billion yen ($1.6 billion) in Sharp Corp. and its display unit.

“We believe Hon Hai’s fundamental recovery remains very strong,” Daniel Chang, an analyst at Macquarie Securities Ltd. in Taipei, wrote in a report today. Chang retained his outperform stock rating and 12-month price target of NT$143.

Four Foxconn group companies will pay 550 yen for each of 121.65 million new shares in Sharp, 11 percent more than the Osaka-based company’s closing share price in Tokyo yesterday before the announcement. Gou and related investment companies will buy 46.5 percent of Sharp Display Products Corp., a venture with Sony Corp. which will keep its 7 percent stake.

Hon Hai and its fully owned unit Foxconn (Far East) Ltd. will hold 6.6 percent of Sharp, and Foxconn Technology Co. (2354), a Taipei-listed maker of computer casings and electronics, and its unit Q-Run Holdings Ltd. will own 3.3 percent, Simon Hsing, spokesman for Taipei-based Hon Hai said by phone yesterday.

“We view this as positive for Hon Hai as it could secure high-end panels for Apple’s products and further grow its LCD TV assembly business,” Nomura Securities Co. analysts including Eve Jung wrote in a report yesterday. Apple is expected to contribute about 50 percent of Hon Hai’s revenue this year, compared with 38 percent last year, they wrote.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net;

Adela Lin in Taipei at alin95@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net.


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