As the world's first company with a market capitalization of more than one trillion yuan, Apple Inc will release its quarterly and annual reports for fiscal year 2018 after trading on November 1 (Beijing time: early morning of November 2).
Throughout October, there have been a series of turmoil in US stocks, first the unresolved issue of trade war and tariffs, and then the Fed's interest rate hike that shook the stock market. On October 25th, the market shouted the slogans of "peak" and "crash" of US stocks. The VIX index soared and is still high above 21:00; the Nasdaq index is down nearly 12% from its peak.
Among the five technology giants, Facebook Inc has fallen nearly 32% from its highest point, while Amazon.Com Inc has fallen nearly 24%. Although Netflix Inc "hit short" after the release of the results, the share price is still down 31%; even Alphabet Inc-CL C, which is growing rapidly in the cloud business, the stock price is also down 18%.
Based on Apple Inc's stock price (white straight line), the stock price of FANG has changed in the past year. Source: Bloomberg, Futu Information
Compared with FAANG's brother, Apple Inc's share price has remained stable despite the sharp fluctuations in the US stock market, down less than 7% from a new high on Oct. 3, and still has a market capitalization of US $1 trillion.
Although the market is optimistic about this giant, does Apple Inc really have peace of mind?
Review: last quarterly report helped Apple Inc break the market capitalization of one trillion yuan.
After trading on July 31, 2018, Apple Inc released its three-quarter report, and its share price rose 5.91% the next day. At that time, affected by the advantages of tax cuts and the "outperformance" of US stocks, Apple Inc rose all the way up, rising 22% during that period, reaching a new high of $233.47 on October 3.
Source: Futu Securities
According to the financial report, Apple Inc's revenue in the last quarter reached $53.265 billion and earnings per share reached $2.34, both exceeding previous expectations.
But revenue in the quarter was still driven by iPhone.It is reported that Apple Inc sold a total of 41.3 million iPhone units, an increase of 1 per cent over the same period last year; the average selling price rose to $724, up 19 per cent from a year earlier and down 0.5 per cent from a month earlier.
The sales volume of the service business and other equipment was excellent. Among them, the revenue of the service business reached 9.5 billion US dollars in the first quarter, a growth rate of more than 30 percent for two consecutive quarters, while the revenue of other equipment was about 3.74 billion US dollars, an increase of 37 percent over the same period last year. Apple Inc's fastest growing business.
In the final analysis, it is still product performance that determines the fate of Apple Inc.
1) Mobile phone is the pillar business, focusing on iPhone sales.
According to the 2017 report, iPhone products accounted for 62 per cent of Apple Inc's revenue, although the share of iPhone has fallen to 56 per cent from the 2018 quarterly report. However, the more than 50 per cent share of revenue suggests that mobile phones are still Apple Inc's pillar business.
Q3 in 2018, source: Bloomberg, Futu Information
The profit degree of mobile phone is determined by price and sales volume.Judging from Apple Inc's recent two press conferences, the starting price of his products is constantly refreshing consumers' psychological expectations. A user once joked in Weibo Corp, "Cook successfully turned Apple Inc into a luxury." "
According to the Wall Street Journal, the average selling price of the iPhone will reach $755, up 16% from the previous fiscal year and setting a new record. FactSet, a data analytics firm, predicts that the average selling price of the iPhone will rise to $775 in the next fiscal year.
Photo Source: Newschamps
The price has gone up, what about sales?Jun Zhang, an analyst at Rosenblatt Securities, said in a report that iPhone XR shipments were cut by 3 million due to "slowing demand and weak pre-sales".
Bank of America Merrill Lynch analyst Wamsi Mohan believes that the trade war and the devaluation of the RMB will affect Apple Inc's business in the Chinese market, so he lowered his iPhone sales forecast. In the third quarter of 2018, the Chinese market accounted for about 18% of Apple Inc's total revenue.
However, JPMorgan Chase & Co released a research report saying that the average selling price of iPhone in the fourth quarter will reach $801, and sales of iPhone XS Max and iPhone XS may account for 40 per cent of unit sales. Investors may have underestimated demand for the iPhone XS Max, which could push the average price of the iPhone to $1099.
IPhone supply chain revenue growth (blue line) vs. iPhone average selling price (black line)
As shown in the chart above, according to the revenue growth reported by some iPhone suppliers in September, JPMorgan Chase & Co believes that iPhone revenue this quarter may grow by 28% compared with the same period last year. In addition, the bank forecasts Apple Inc's iPhone shipments of 76 million in the first quarter of 2019, total revenue of $93.1 billion, gross profit margin of 38.5% and earnings per share of $4.91.
2）"Service"Business may be successfulBreakthrough, pay attention to the growth rate
The service business ranks second in Apple Inc's revenue, accounting for 11%, according to the 2017 annual report. The business currently includes App Store,AppleCare,iCloud,iTunes,Apple Music,Apple Pay and Texture digital magazines.
Revenue from "services" was $9.548 billion in the third quarter of 2018, up 31 per cent from $7.27 billion in the third quarter of 2017. According to Apple Inc's official data, revenue from third-party subscription services, which refers to App content or service subscriptions, has exceeded $300m, up 60 per cent from a year earlier.
Cook said, "subscription brings not only substantial revenue, but also a growing share of services." At present, there are nearly 30, 000 App subscriptions, and this number continues to grow strongly.
Quarterly changes in Apple Inc's "service" revenue. Photo: sixcolors
Previously, Morgan Stanley analyst Katie Huber had predicted that "in the next five years, service revenue growth will account for more than 50% of Apple Inc's total income growth, and service revenue per device will reach $30-- for many mobile phone manufacturers, it is hard to imagine that each device can earn $30 in addition to hardware profits, which is precisely the dividend brought by Apple Inc hardware."
3）The new product was hotly discussed at the press conference.
Relying on the release of Apple Watch 4, Apple Inc's other equipment business may usher in new growth points.. JPMorgan Chase & Co wrote in the research report that with the upgrade of Apple Watch, the product with "health features" is likely to become the most popular holiday gift, and shipments may grow rapidly in the first quarter of fiscal 2019.
In addition, Apple Inc held a new product conference in New York on October 30th.The new MacBook Air,Mac Mini and the new iPad Pro with comprehensive screen.Cook said Mac is "a necessary creative tool", with the total active installation base of Mac reaching 100m, while iPad is the most popular "computer" in the world, and Apple Inc has sold 400m iPad units.
Related information:"Apple Inc's new product launch: starting from iPad Pro799, you can charge iPhone directly."
The number of short positions has skyrocketed, but it has not made a profit so far this year
According to the latest S3 Partner report, Apple Inc ranks second in the short selling list, with a short position of 9.043 billion US dollars, second only to Tesla, Inc., who is in the limelight. It is reported that a large part of the weight of short selling is for risk hedging, indicating that investors still have great uncertainty about the future of US stocks.
Source: Bloomberg
Short sellers continued to increase their positions in October, with Apple Inc's short positions increasing by 1.6 million shares, according to the report. On Oct. 26, the big five technology stocks earned short sellers about $1.3 billion by market capitalization.However, investors should still note that so far this year, the bears ambushing Apple Inc's shares are still losing money, losing about 2.291 billion US dollars.
Source: Bloomberg
The boss holds it, and the stock price still depends on the fundamentals.
It is reported that Berkshire Hathaway is Apple Inc's second largest shareholder. Berkshire Hathaway bought Apple Inc shares for the first time in the first quarter of 2016. Buffett invested $47.2 billion in Apple Inc as of June 30, 2018; in the first quarter of this year alone, Buffett increased his stake in Apple Inc shares by 75 million shares.
Source: Berkshire Hathaway Financial report
Duan Yongping, a well-known investment guru in China, is no exception. From January 2011, he began to buy Apple Inc and held it for nearly 8 years. He believes that "Apple Inc Company can also be regarded as a model of dare to be the queen of the world." "
Source: snowball
However, Rod Hall, an analyst at Goldman Sachs Group, reiterated its "neutral" rating on Apple Inc's stock last week, citing concerns about the adverse impact of Sino-US trade problems. After all, Apple Inc accounts for about 18% of the total revenue in the Chinese market, and at present, China's overall mobile phone industry is facing a decline in shipments, Apple Inc may not be able to do well alone.
So, what do you think of Apple Inc's upcoming financial report? Can Apple Inc still keep the market capitalization of one trillion yuan and continue to hit a new high?
(editor / Zhang Huiyu)