FIH Mobile Surges on Outlook for Profit to Double on Phones

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FIH Mobile Ltd., assembler of Xiaomi Corp. smartphones, surged the most in a month in Hong Kong trading after forecasting profit will more than double.

The shares climbed 6.5 percent, the most since May 29, to HK$4.77 at the close of trade.

FIH Mobile, a unit of Foxconn Technology Group, is boosting profit as fast-growing Chinese smartphone makers such as Xiaomi and Huawei Technologies Co. rely on the company’s factories to produce the devices. The manufacturer also expects to assemble its first Indian-made smartphone this year and to set up multiple plants in the country.

Stronger component sales, mostly driven by metal casings used by Chinese smartphone makers, are also helping the company’s earnings, Andrew Lin and Xia Xiao, at China International Capital Corp., wrote in a note to clients. FIH should expand margins as it has upgraded to produce higher value components, they wrote. CICC raised its rating on the stock to conviction buy, from buy.

Net income will be $120 million to $135 million for the six months ending June 30, the company said Wednesday in a statement to the Hong Kong exchange. That’s as much as 20 percent higher than the average of analyst estimates compiled by Bloomberg.

First-half sales will climb 64 percent to surpass $3.75 billion, FIH said in Wednesday’s statement, compared with the $3.4 billion average of analysts’ estimates. Gross profit will rise 59 percent to about $225 million, it said.

New customers such as Guangdong Oppo Electronics Co., OnePlus and India’s Micromax Informatics Ltd. are helping offset a slowdown at former mainstays such as Nokia Oyj and Sony Corp., FIH Chairman Vincent Tong said in an interview last month.

Taipei-based Hon Hai Precision Industry Co., the largest member of Terry Gou’s Foxconn Technology Group, owns about 70 percent of FIH.

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