Taiwanese suppliers react positively to Apple results

Taipei, Shares in Taiwan's Apple suppliers generally moved higher in the mid-morning session on Friday following Apple Inc's better than expected results for the October-December period, reducing concerns over shipments of the premium iPhone X, dealers said.

While most major "Apple concept stocks" reacted positively to the company's earnings, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which is believed to supply the A11 processor for the latest iPhone, came under pressure pulling down the broader market, they said.

As of 11:04 a.m., shares in iPhone assembler Hon Hai Precision Industry Co. had risen 1.50 percent to NT$94.90 (US$3.25), shares in Concraft Holding Co. a connector supplier to Apple, had gained 3.33 percent to reach NT$326.00, and shares in Catcher Technology Co., a metal casing maker for Apple, added 5.85 percent to hit NT$353.00.

Bucking the uptrend, TSMC, the most heavily weighted stock on the local market, had fallen 0.77 percent to NT$257.50 on the Taiwan Stock Exchange, where the weighted index was down 0.33 percent at 11,123.77 points.

"Buying in these Apple concept stocks reflected the latest Apple earnings. Due to its better than expected results for the last quarter, Apple shares moved more than 3 percent in after-hours trading on Wall Street so Taiwan's suppliers followed suit," Mega International Investment Services Corp. analyst Alex Huang said.

"It seemed investors had previously been too pessimistic about demand for the iPhone X, which punished most Apple concepts in Taiwan in recent sessions," Huang said.

At an investor conference held overnight, Apple said its net profit for the October-December period stood at US$3.89 per share, beating an earlier market estimate of US$3.86.

In addition, Apple's sales for the last quarter totaled US$88.3 billion, compared with an earlier market expectation of US$87.28 billion. Market analysts said the higher than expected sales and profit resulted from Apple's pricing strategies which offered the most expensive ever product in the iPhone line-up.

Although iPhone unit sales for the three month period reached 77.3 million units, shy of an earlier market estimate of 80 million units, Apple CEO Tim Cook told the investor conference: "iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November."

Apple said its revenue for the current quarter is expected to range from US$60-62 billion, compared with an earlier market estimate of US$65.73 billion.

"However, investors seemed to ignore the lower than expected sales guidance for the moment since such negative leads had been priced into these Apple concept stocks," Huang said.

Huang said TSMC underperformed its counterparts in the Apple supply chain with investors taking their cue from foreign institutional selling in the previous session. According to the TWSE, foreign institutions sold a net 3.88 million shares on the main board on Thursday.

"Amid fears of a rate hike cycle on the U.S. market, many investors remain reluctant to chase prices for the moment so the broader market has been moving in consolidation mode," Huang said.

"But, high liquidity means the weighted index is unlikely to see a major pullback any time soon," Huang added.

Source: Fucus Taiwan