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Hon Hai Q4 profit propped up by NT$66b sale of Sharp shares

[TAIPEI] Hon Hai Precision Industry's fourth-quarter net income would have missed estimates had it not been for the one-time gain from the sales of shares in its Japanese unit Sharp, analysts say.

Hon Hai "saw gains of NT$66 billion (S$2.88 billion) from its disposal of Sharp C shares," Vincent Chen, head of regional research at Taipei-based Yuanta Investment Consulting, wrote in a March 30 note after the company reported its earnings for 2017.

Its earnings per share "would have missed consensus by 65 per cent excluding gains from Sharp C share disposal". Arthur Liao, an analyst with Fubon Securities, reached a similar conclusion.

Hon Hai, also known as Foxconn Technology Group, said in a Dec 29 exchange filing that it sold 352.5 billion yen (S$4.06 billion) worth of Sharp C shares to ES Platform LP, a partnership formed by company employees, for a profit of 252.5 billion yen.

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The iPhone manufacturer reported fourth-quarter net income of NT$71.7 billion Friday, while operating profit was NT$32.4 billion, according to Bloomberg's calculations. Both gross margin and operating profit margin missed estimates.

A Foxconn spokesman did not immediately provide details on the sale of Sharp shares.