Apple supplier AAC Tech suffers stock plunge after profit warning
HONG KONG (Reuters) - Apple Inc supplier AAC Technologies Holdings Inc saw its shares dropped 13 percent on Tuesday after the acoustic component maker said it expected first-quarter net profit to fall as much as 75 percent due to reduced orders.
The Hong Kong-listed firm late on Monday forecast January-March profit to fall 65-75 percent compared with the same period a year earlier, and said its gross profit margin would narrow.
"In addition to a usual weak seasonal quarter, the company's revenue for Q1 2019 is expected to be significantly negatively affected by reduced orders from customers," AAC said in a stock exchange filing.
AAC supplies acoustic and haptic components to Apple, which last month said revenue from iPhone sales in the December quarter declined 15 percent from the previous year. The U.S. tech firm issued a rare revenue warning citing weaker iPhone sales in China where economic growth is slowing.
AAC said profitability would increase due to improvement in its product portfolio, production efficiency and cost control. It also expects customers to upgrade their smartphone offerings.
The announcement comes as fellow Apple supplier Luxshare Precision Industry Co Ltd late on Monday said 2018 net profit likely rose a 61 percent.
Jefferies analyst Rex Wu said in a research note last month that Luxshare's expected earnings growth reads "negatively on its peers' order allocation and margin, including AAC", and that Luxshare's fourth-quarter earnings were likely boosted by the firm winning increased iPhone custom.
The price of AAC shares had risen 29 percent so far this year as of the previous market close.
On Tuesday, the stock fell as much as 13 percent to HK$50.85, versus a 0.7 percent fall for the benchmark Hang Seng Index, and was the fourth most actively traded in early trade.
AAC is scheduled to announce first-quarter earnings at the end of May.
(Reporting by Anne Marie Roantree, Donny Kwok and Sijia Jiang; Editing by Stephen Coates and Christopher Cushing)