Apple

  • Apple   reported third quarter results which exceeded strong market expectations,   reporting revenue growth of 36% year-on-year to $81.4 bn.

  • Growth   in emerging markets, including China and india, resulted in paid subscriber   accounts in the services sector of over 700m. Earnings per share (EPS) grew   100% to $6.30 per share.

  • Third   quarter results were robust notwithstanding a very strong set of results in   the previous quarter, reflecting the strength and diversity of the groups’   business model. Q3 EPS rose 29% to $1.01, with revenue rising 36%   year-over-year. Operating cash flows rose to $2.1 bn, with gross margins   improving to 43.3%.

  • The June quarter constituted a record for the iPhone 12 with sales of $39.6 bn,   Apple Mac with $8.2 bn, Apple Store, Apple Arcade, Wearables, Home and   Accessories with $8.8 bn, and Services of $7.5 bn, beating the already strong   expectations.

  • 75%   of customers purchasing the Apple Watch in the current quarter were new   customers, whilst 50% of customers purchasing iPads or Macs were also new.

  • Apple had strong cash generation resulting in significant shareholder value, with   major share buybacks and the strong balance sheet enabling the company to   explore new ventures such as electric vehicles and batteries.

  • The company also received 35 Emmy Nominations for newcomer Apple TV, reflecting   the innovation and success of new ventures. This was despite market skeptics   viewing them as latecomers in this market.

  • ·The  market is also anticipating the launch of the new iPhone 12 in September 2021   indicative of the ongoing product innovation. This means that new revenue   could again be generated in the 4th quarter of 2021, with a strong demand for   5G smart phones.

  • The share price has run hard this year to a high of $145. It is on a forward PE of around 29x and a market cap of over $2.4 trillion. We hold the share in client portfolios and the share can be bought into any weakness as a long term investment. The market has once again underestimated the positive aspects of the group, which is not a one trick pony. Apple reflects the changes in the dynamics of the global economy with a push into electric vehicle technologies and the apple service bundle plan initiative for $30 per month, which could grow into a strong annuity stream.

Apple