Foxconn shares surge on broker upgrades
Foxconn International Holdings, the world's biggest contract maker of mobile phones, surged by a record yesterday after Citigroup and HSBC upgraded the stock on much improved prospects for generating profits.
The company's shares surged by as much 31.9 per cent to finish at HK$3.60, compared with a 0.47 per cent decline in the benchmark Hang Seng Index.
HSBC raised their recommendation to overweight from underweight, saying revenue will rise 41 per cent in fiscal 2013. "These new customers (Apple and Amazon) should help lift utilisation," HSBC analysts Yolanda Wang and Joyce Chen wrote.
Citigroup upgraded the firm to buy from neutral and lifted the target price on the stock to HK$5.80. The bank is expecting a "turnaround" in revenue for the company next year, on speculation new orders would surge as the battle for smartphones heats up further.
"FIH now has a golden opportunity to resume growth," Citi said in the report.
The company is expected to ship 16 million iPhones at an average US$280 each next year, it said.
Sales would grow 109 per cent year on year and net profit will be US$251 million in 2013 and US$546 million in 2014.