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May 30, 2017

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Foreign bulls poised to congregate on Hon Hai

TAIPEI, Taiwan -- Foreign institutional investors are likely to elevate holdings of Hon Hai Precision Co., as the company exhibits improving prospects in gaining the lion's share of Apple's supply chain.

Ahead of Apple's earnings release next Tuesday, several foreign institutional investors have been observed in raising the target price of Hon Hai shares, while expressing an upbeat outlook on the company's performance this year.

BNP Paribas (巴黎證券) on Friday raised its target price for Hon Hai shares to NT$110, while issuing a "buy" advisory for investors. In addition, foreign institutional investors on Friday purchased 28 million shares of Hon Hai, and snatched up 32.3 million of the company's shares over the past 13 trading sessions. On exuberant buying from foreign institutional investors, Hon Hai shares on Friday closed at NT$85, gaining NT$1.1, or 1.31 percent.

According to market commentators, foreign institutional investors are likely to reshuffle their holdings on technology stocks and shift weighting towards Hon Hai.

Foreign institutional investors have dumped holdings on Largan Precision Co. (大立光) following a hot streak of consecutive gains. Largan shares tumbled dramatically from their height of NT$1,255 on Jan. 22 and receded to Friday's low of NT$1,160 as institutions take profit and unload the company's shares following its earnings conference on Jan. 23.

Meanwhile, foreign institutional investors expressed downbeat outlooks on prospects of fabless semiconductor company MediaTek (聯發科), over concerns that the company has yet to produce a marketable chipset catering to the time division long-term evolution mobile network (TD-LTE). Market commentators stated that the void in foreign investors' interest will likely be replaced by recent optimism on Hon Hai prospects.

Amid the impending arrival of the fourth generation mobile network in Taiwan and the pervading slump in the PC industries, Hon Hai shares remain the most viable vehicle in capturing anticipated sales growth of Apple, said a BNP Paribas analyst yesterday.

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