A Taiwanese maker of tiny components used in smartphone circuit boards and chips is making huge profits for its investors.
Yageo Corp. has jumped 908 percent on Taiwan’s exchange since the start of last year, the most among stocks on MSCI Inc.’s global gauge, to give it a market capitalization of almost $10 billion. The company, which manufactures capacitors and resistors essential for regulating electrical flows, boosted profit more than five-fold from a year earlier in the first quarter as demand increased and competitors cut output.
Chinese production of such components has been reduced as the government moved to curb pollution, while leading Japanese manufacturers have shifted capacity into other products, creating a shortage that has benefited Yageo, according to Allan Lin, assistant vice president at Concord Securities Co.
The result is an “astonishing” increase in earnings per share, Lin said.
The extreme gain is attracting the attention of short sellers. The percentage of outstanding shares sold short climbed to 4.4 percent on Tuesday, the highest in four years, according to IHS Markit Ltd. data.
Still, analysts continue to be bullish on the company, which supplies companies including Apple Inc., Intel Corp., and Sony Corp. There are 12 buys, zero holds and just one sell on the firm, which reported a 99 percent increase in sales in April from a year earlier. Moves in the shares are determined by the market, said Yageo spokesperson Sandy Chang.
The stock jumped a further 9.9 percent on Thursday, making it the top contributor to gains on Taiwan’s benchmark index, and further boosting the wealth of its chairman Pierre Chen, who has a 7.7 percent stake, according to the latest data compiled by Bloomberg.
— With assistance by Sofia Horta E Costa, and Young-Sam Cho