Brokerages boost Hon Hai stock rates after 3rd Quarter results

Brokerages boost Hon Hai stock rates after 3rd Quarter results

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After the world’s largest contract electronics manufacturer announced an 80% sequential increase in net profit for the third quarter, several international brokerages increased their target price on shares in iPhone assembler Hon Hai Precision Industry Co.

In a research note, a Hong Kong-based securities house said Hon Hai’s bottom line, also known on the global market as Foxconn, was partially improved in the July-September timeframe by increasing the profitability of several of its major companies, including Hong Kong-listed FIH Mobile Ltd., which rolls out phones for global brands in the non-Apple Inc. region.

The strengthened operations of its subsidiaries helped Hon Hai report higher profit margins in the third quarter improving the net profit of the parent company, the brokerage said, adding that it has increased its target price on the stock from NT$105 to NT$112 (US$ 3.67) and kept a “buy” rating unchanged.

Shares of Hon Hai, Taiwan’s second-largest publicly traded company in terms of consumer capitalization, rose 0.90 percent on Friday to close at NT$90.10 on the Taiwanese Stock Exchange, where the benchmark weighted index ended up 0.66 % at 11,525.60 points as large-cap tech stocks, like Hon Hai, acted as a driver of the gains.

Hon Hai announced its third-quarter results at an investor conference on Wednesday, with net profit at NT$30.66 billion for the July-September period, up 80% from NT$17.05 billion in the second quarter. The figure for the third quarter also rose 23% from the previous year.

Earnings per share of the company rose fromNT$1.23 in the second quarter to NT$2.21 in the third quarter, while also rising fromNT$1.57 at the same time last year.

Hon Hai’s gross margin, in the third quarter, difference between sales and cost of selling goods — grew from 5.31 per cent in the second quarter to 6.01 per cent, while its operating margin — the difference between revenues, selling goods and operating expenses — was 2.41 percent, up from 1.34 per cent.