Taipei--Market capitalization of Taiwan-based manufacturing giant Hon Hai Precision Industry Co. (??) breached NT$1.89 trillion (US$62.38 billion) on Monday, when its share price hit a high since late August 2014.
The strong showing came after an Asia-based brokerage raised a target price on Hon Hai shares amid hopes that the Taiwanese firm's efforts to expand its product portfolio, including robots, and even owning its own brand, will bear fruit, dealers said.
The gains posted by Hon Hai drove the broader market higher, helping the weighted index on the Taiwan Stock Exchange to jump over the stiff technical barriers ahead of the 10,200-point level, the dealers said.
Shares of Hon Hai gained 4.29 percent to close at NT$109.50, with 91.13 million shares changing hands on the main board, where the weighted index ended up 0.92 percent at 10,250.60 points Monday. The closing price of Hon Hai was the highest level since Aug. 27, 2014, when the closing level stood at NT$112.00, and boosted the market cap of the stock to NT$1.898 trillion.
The stock attracted strong buying soon after the local equity market opened after an Asian brokerage upgraded a target price on Hon Hai shares over the next 12 months to NT$200 from NT$150.
In a research note, the brokerage said that Hon Hai, an assembler of iPhones and iPads for Apple Inc., has become an integrated company that not only specializes in contract manufacturing for international brands but also has begun production of robots and components with high profit margin, and also owns its own brand, Japanese brand Sharp.
Hon Hai owns a 66 percent stake in Sharp after completing a deal to acquire the Japanese firm for US$3.5 billion in August 2016. Since the acquisition, Hon Hai has made efforts to polish the Sharp brand in the global market by aggressively promoting its products.
The brokerage said that through Sharp's subsidiary, Kanatsu, Hon Hai has invested in smartphone camera lens production, while the Taiwanese firm is planning to enter the semiconductor business with an ambition to acquire Toshiba Corp.'s memory chip assets.
Market analysts said that the strong buying in Hon Hai shares also reflected continued optimism toward the launch of the next-generation iPhones expected in September, the 10th anniversary of the smartphone, which could trigger waves of replacements.
Local media reported recently that Hon Hai is expected to be the sole assembler of the new 5.8-inch iPhone model, which will be equipped with an advanced organic light-emitting diode (OLED) screen.
Hon Hai is scheduled to hold an annual general meeting on June 22, so the market anticipates that the company will give positive leads after that, which also prompted many investors to pick up the stock on Monday.
Source: Focus Taiwan News Channel