Hi-P: Hon Hai reported recorded sales of NT$317b in Dec, +3% mom, +30% yoy, much better than the mkt expectation of ~10% mom decline in Dec. Citi believes the strong sales were entirely driven by iPhone, with ~16.5m units shipped by Hon Hai in Dec, and >40m units (75-80% iPhone 4S) in 4Q12.
Hi-P may be a proxy to the strength of iPhone shipments, with Apple said to be Hi-P’s second largest customer, contributing 10-15% of sales.
Following Hi-P’s weak 3Q11 results, Street expectations have been lowered, leaving less room for disappointment now. Recall, for 4Q11, mgt expects revenue to rise both qoq and yoy, and full yr revenue to rise yoy but earnings to decline yoy.
Last wk, DMG lifted Hi-P to a Buy from neutral, and raised TP to $0.79 from $0.62.
Technically, the stock made a new base at $0.49 in Oct last yr. Having broken out of the long term downward trend channel, we may now be looking at the beginning of a new upward trend. Indicators are above neutral and rising positively which bodes well for the near term trend. See initial support at $0.60, resistance at $0.70.
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