Apple Beats 3Q Forecasts with Strong Earnings... "Favorable for Domestic Component Stocks"

Kiwoom Securities Report

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Myunghwan Lee] As Apple posted earnings that exceeded market expectations for the third quarter this year, securities firms have issued positive assessments for domestic companies supplying parts for the iPhone.

Kiwoom Securities analyzed on the 29th, "(Apple) announced better-than-expected earnings compared to other big tech companies."

On the 27th (local time), Apple announced third-quarter earnings that surpassed market forecasts. Apple reported revenue of $90.15 billion (approximately 128 trillion KRW) for the third quarter (Apple’s fiscal fourth quarter), an 8.1% increase compared to the same period last year. Earnings per share (EPS) also rose by $0.02 to $1.29 (approximately 1,835 KRW) during the same period.

These figures all exceeded Wall Street’s expectations. The market revenue forecast compiled by financial information provider Refinitiv was $88.9 billion. The expected EPS was $1.27.

Apple’s strong third-quarter performance was also reflected in its stock price. On the 28th, Apple’s stock price surged 7.56% ($10.94) to close at $155.74 on the Nasdaq, leading the overall market rally. This was Apple’s largest single-day gain since April 2020.

However, sales of the flagship iPhone fell short of expectations. Third-quarter iPhone revenue was $42.63 billion (approximately 61 trillion KRW), below the market forecast of $43.21 billion. Nevertheless, sales increased by 9.6% compared to the same period last year.

Kiwoom Securities assessed that Apple delivered earnings in line with expectations despite an unfavorable environment including economic slowdown. They noted strong performance from PCs such as the MacBook and wearables like the Apple Watch despite the economic slowdown and strong dollar. Sales in Europe and China were also better than feared. However, service revenue, which is more sensitive to economic conditions, was deemed insufficient.

Kim Jisan, head of Kiwoom Securities Research Center, predicted, "Positive effects are expected for domestic iPhone vendors who recently experienced significant stock price corrections." Domestic companies supplying key iPhone components include Samsung Display (OLED), LG Innotek (camera modules), and BH (FPCB).