Apple supplier AAC Technologies slumps as brokers cut target price
The maker of iPhone components fell almost 5 per cent after reporting disappointing profits for the first quarter
AAC Technologies Holdings slid for a second day after a series of brokers cut their target prices for the stock even as they kept a “buy” rating.
The company, which supplies Apple with miniature electronic components, slumped 4.9 per cent to HK$110.10 on Tuesday after falling 4.8 per cent the previous day. It was the worst performing blue chip amid a decline of 1.2 per cent in the benchmark Hang Seng Index.
On Monday, AAC Technologies posted first-quarter growth in net profit of 6 per cent and gross profit margin of 38 per cent, both a long way short of analysts’ estimates. It attributed the disappointing results to the appreciation of the yuan. The Chinese currency advanced 4 per cent against the US dollar in the first quarter, the fourth best performer among the 11 most traded Asian currencies, according to Bloomberg data.
That prompted a series of brokers to trim AAC Technologies’ target price. Among them, Bank of America Merrill Lynch cut it to HK$150 from HK$175; HSBC to HK$125 from HK$215; Credit Suisse to HK$136 from HK$143 and Daiwa to HK$160 from HK$195.
Apple supply-chain stocks are down about 22 per cent since the launches of the iPhone 8 and iPhone X, making it one of the worst-performing sub-sectors in Asian technology.
Brokers said that while downside risks to vendors’ margins remained, the weakness was being largely priced in.