Hon Hay Precision industry Co Ltd, the world’s biggest contract maker of electronic goods, booked it’s largest-ever first-quarter profit due to outstanding demand from primary client Apple Inc.
The Taiwanese manufacturer earns as a lot as 60 percent of income essentially assembling Apple products such as its iphone 5s (photos), analysts estimate, and in latest months has assorted into software and products and services as trade watchers level to a slowdown in the smartphone market.
However Apple defied such forecasts in March when iphone shipments beat market estimates through 15 %, pushing first-quarter revenue to a record excessive in a put up-holiday length when client items sales in most cases fall.
That demand helped Hon Hay ebook a 19.5 percent upward push in first-quarter web revenue to T$19.fifty four billion ($647.6 million), versus the T$18.18 billion mean estimate of 12 analysts polled by Thomson Reuters.
Shares of Hon Hay ended 0.three % better in advance of the outcome, in comparison with a zero.7 pic achieve within the broader TAIEX index. The inventory has raised 9.7 pic since the start of the 12 months versus the benchmark’s 3.1 % acquire.
Hon Hay’s reliance on Apple has been referred to as both merit and quandary via commentators. Smartphones such as the iphone command excessive prices however have already transform fashionable in advanced economies
Researcher IDC initiatives global smartphone sales to develop 19 percent this year from 39 percent final year, slowing to a regular of eleven.5 pic over 2014 to 2018. The quickest growth rates are in rising markets, where low-end models dominate.
“Slowing sales generally is a cap on Hon Hay’s earnings one day,” mentioned Quanta Securities analyst Vincent Chen. “That is why you’ve got had [company chairman] Terry Gou say it must look for other sources of increase.”
In a departure from manufacturing, Hon Hay expects to start working a fourth-era (4G) cell telecommunications community this yr. And has hired hundreds of software engineers to work on cloud computing initiatives.
But reliance on Apple is still likely to be a boon, with the release of a new-adaptation iphone later this year. Citi analyst Wei Chen expects Apple to order 90 million handsets from Hon Hay in 2014, virtually double the orders for the iphone 5s.
The subsequent iphone is more likely to have a larger display than its predecessors. This might release a substantial client base put-off with the aid of the present models’ small monitors compared with rival choices from Samsung Electronics Co Ltd, Chen wrote in an up to date record.
“We imagine the iphone 6 can be the largest product cycle that Hon Hay has but viewed,” Chen wrote.