Foxconn Intl climbs on brokerage report of possible Apple deal
Foxconn International Holdings Ltd (FIH) (2038.HK), the world’s biggest contract maker of cell phones, surged on Friday on speculation the company will soon make iPhones for technology giant Apple Inc.
Shares of FIH, which assembles handsets for such companies as Nokia Oyj, Huawei Technologies Co Ltd and ZTE Corp, gained 3.95 per cent to HK$3.16 as of 1:34 pm on Friday, after earlier rising as much as 10 per cent. Its sister company, Foxconn Technology, makes Apple devices, including the iPad and the new iPhone5 in China.
“FIH is likely to start producing iPhones in late 2012 or early 2013,” Birdy Lu, an analyst with Daiwa, wrote in a research report dated October 10. The broker initiated a “buy” rating on the stock, with a target price of HK$3.8.
“We assume that FIH will make 7 million iPhones (about a 4 per cent share of total production) in 2013, which should help increase FIH’s 2013 revenue by more than 30 per cent year-on-year,” the report said.
The stock gained 17 per cent in the previous session. Yet the company said on Friday it was unaware of any reason behind the sharp rise in its stock price.
FIH is seen as an also-ran in the smartphone sector, after iPhone took off worldwide in 2007. As Apple quickly gained market share from key FIH clients such as Nokia and Motorola, its earnings came under pressure. Despite a challenge to the iPhone dominance from smartphones powered by Google's Android operating system, and manufactured by South Korea's Samsung Electronics and LG did not help the company either, because most of the components were made in-house.
FIH reported a US$226.07 million loss, its highest-ever first-half net loss in August.