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Breaking Records: Hon Hai, the iPhone Manufacturer, Soars with AI and Apple Partnership
Hon Hai Precision Industry Co. Sees Record Sales Growth
Shares of Hon Hai Precision Industry Co. surged to an all-time high following the announcement of its strongest monthly sales growth since the beginning of 2023. This positive development has raised expectations for both iPhone and AI server sales.
Monthly Revenue Increase
The company, responsible for assembling the majority of Apple Inc.’s smartphones, reported a remarkable 19% increase in monthly revenue, reaching NT$510.9 billion ($15.8 billion) compared to NT$429.2 billion in April 2023. This achievement marked a record high for the month, as stated by Hon Hai in a recent press release. Consequently, its stock price soared by up to 6.7% on Monday, marking the most significant intraday gain in approximately two weeks.
Diversification Efforts
While Hon Hai, also known as Foxconn, is renowned for manufacturing most of the world’s iPhones, the company is now shifting its focus towards the production of datacenter server racks and other AI-related equipment.
Market Expectations
Investors are closely monitoring Hon Hai for insights into iPhone sales, given that Apple’s business contributes more than half of the company’s revenue. The recent near-10% decline in first-quarter revenue was partly attributed to underperformance of Apple’s flagship device. Hon Hai is set to release its full quarterly earnings report next week.
Product Line Growth
Citigroup analysts highlighted the significant growth in the computing segment, primarily driven by the launch of Apple’s new MacBook Air. Additionally, there was a surge in iPhone demand ahead of China’s Labor Day holiday.
Future Outlook
Despite the second quarter being a traditional off-peak season, Hon Hai remains optimistic about its operations, expecting both quarter-on-quarter and year-on-year growth. The company anticipates meeting current market expectations.
Apple’s Performance in China
Apple pleasantly surprised investors with strong quarterly revenue from China, defying negative projections on iPhone sales. This unexpected outcome could be attributed to various factors, including differences in analysts’ assessments and higher-than-expected average sales prices.
Challenges Ahead
Bloomberg Intelligence analysts foresee potential challenges for Hon Hai in boosting its iPhone-related revenue in 2024, considering the subdued demand in the first quarter and uncertainties surrounding the business landscape. Margins may face risks due to diminishing scale economies and ongoing capacity shifts to India.
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Apple’s Sales Forecast
Apple projects a modest sales increase in the low single digits for the current period. The company expects double-digit growth in both its iPad and services divisions, while refraining from providing a specific forecast for iPhone sales.
–With contributions from Betty Hou.
Conclusion
Investors closely monitor Apple’s performance in China, given its significance as a major market and global iPhone production hub. The company’s strategic forecasts and Hon Hai’s diversification efforts will shape the future landscape of the tech industry.
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©2024 Bloomberg L.P.
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Breaking Records: Hon Hai, the iPhone Manufacturer, Soars with AI and Apple Partnership
1Q24 Earnings Trends: Analysis of Three Popular Leasing Stocks
We have entered the earnings announcement period. Another group that investors have been continuously interested in is “Leasing.” Therefore, the Share2Trade news team has compiled 1Q24 earnings trends of 3 popular stocks in this group to present to investors.
Most recently, analysts at Pie Securities Public Company Limited expect the total net profit for 1Q24 of 3 microfinance groups (MTC SAWAD TIDLOR) to be strong at 3.67 billion baht, growing 13.7% from the same period last year and grew 4.2% from last year’s quarter), supported by net interest income expanding alongside credit expansion, although NIM decreased due to higher financial costs.
It maintains a positive view on the trend of net profit in 2024 which will grow strongly at 18.3%, supported by higher net interest income together with loan expansion. The Commission’s income from insurance brokerage expanded and credit costs fell from bad debts which are expected to increase more slowly.
Although the two MTC SAWAD TIDLOR will have improved profitability in 2024, the main challenges remain of Bad debts increasing, NIM decreasing, losses from repossessed vehicles and the government’s strict measures on investment, maintaining the pressure of investment ” Equal to the market” picks TIDLOR as an outstanding stock.
TIDLOR close to making billions in profit
In terms of fundamental analysis of each company from TIDLOR, analysts at Yuanta Securities (Thailand) Co, Ltd expect TIDLOR in the 1st quarter of 2024 to have a net profit of 1,029 million baht, growing 5.8% from the same period last time. year and growing 16.5% since the previous quarter.
This was supported by Provisions expected to fall. 20.5% since the previous quarter After accelerating the provision to accommodate the risks of the loan portfolio, including a large write-off in 4Q23, the company’s cost of credit is expected to decrease to 3.2% from 4.2% in 4Q23, it is expected to increase slightly in 1.5%. which is considered a non-concerning level and below competitors.
Furthermore, operating costs are expected to decrease by 2.2% from the previous quarter. Due to lower employee incentive costs due to seasonal factors, the Cost to Income Ratio is expected to decrease slightly to 55% from 55.3% in 4Q23.
And net interest income is expected to grow 2.8% from the previous quarter, although NIM is expected to slow to 15.4% from 15.6% in 4Q23 due to both increased finance costs. and a lower recovery rate due to the lower number of days used to calculate interest income.
Meanwhile, the forecast for the 2nd quarter of 2024 is expected to continue to increase profits from the previous quarter. Due to reduced costs and demand for loans is still strong.
MTC profit increases by 25%
Continuing with MTC, analysts at Asia Plus Securities Company Limited, the research department expects a net profit for the 1st quarter of 2024 (budget announcement 7 May 2024) equal to 1.33 billion baht, although it has decreased by 1% from the previous quarter due to seasonal increase in OPEX. But net profit still expanded by 25% from the same period last year.
This is due to credit expansion. When assessing the quality of the assets, they are still managed. He expects profits for the rest of the year to accelerate. From the development of the CREDIT COST direction, it can be seen that the quality of assets is a positive factor of the government’s budget allocation.
and the chance of La Niña (rain) in the second half of 2024 is a factor driving the income of farmers, who are MTC’s customer base, according to the production volume which tends to improve compared to the current El Niño condition ( Drought) Therefore, full year 2024 profit is expected at 5.7 billion baht, growing 16% from the previous year We still recommend Outperform as a top pick in the group, with a target price of 51 baht.
SAWAD profit jumps 10.2%
Finally, in SAWAD, analysts at Phillip Securities (Thailand) Public Company Limited expect SAWAD to have a profit of 1.3 billion baht, an increase of 10.2% from the same period last year and an increase of 4.4% from the previous quarter. This is because interest income increases along with the increase in loans. Although interest costs and provisions are expected to increase.
Therefore, the 2024 profit forecast is still maintained at 5.4 billion baht, an increase of 7.9% from the previous year, SAWAD will benefit from revenue recognition. “Instant cash” for a full year but with interest costs and additional reserves It is still a factor weighing on the operating results.
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1Q24 Earnings Trends: Analysis of Three Popular Leasing Stocks