Hon Hai Precision Industry Co. has exceeded analysts’ expectations ahead of the release of Apple Inc. (NASDAQ:AAPL)’s new iPhone 6. Some reports of new iPads have also given a boost to the stock price of Apple Inc. (NASDAQ:AAPL)’s supplier. Hon Hai shares reached the highest level in three weeks and the company reported profits that beat all expectations. Hon Hai’s Q2 net income went up by 9% to NT$20.2 billion ($673 million). Discussing the Hon Hai’s profits and reasons behind the growth in a program, Bloomberg’s David Ingles said that Hon Hai is likely working on new Apple Inc. (NASDAQ:AAPL) products. He also said that Hon Hai’s efficiency is good and the company will perform well in the coming months.
“[…] Margins are very important to look at, because it shows you efficiency, and you look at margins, they are slightly better, 3.2%, it’s a bit thin, but that’s the nature of the business really […],” said Ingles.
Ingles said that there is a high chance that Apple Inc. (NASDAQ:AAPL) paid Hon Hai a large payment for the mass production of iPhones and iPads and this payment had an effect on the elevation of profits in the report. He said that the report shows the effects of a large one-time payment made by some client. He said that clients make such payment to suppliers for the engineering and manufacturing costs.
Ingles added that sales of Hon Hai are lower for the second quarter, but the basic reason behind this is that there was no new product from Apple Inc. (NASDAQ:AAPL). He said that the improved profits and margins point towards the likelihood of a new product in the Hon Hai stream. Hon Hai’s counts 40% of its revenue stream to come from Apple’s products, therefore it’s performance largely depends upon Apple Inc. (NASDAQ:AAPL).