Apple Inc. (AAPL) recently opened a store in Zhengzhou, the capital city of the Henan province in central China.
We believe that this new store in downtown Zhengzhou is an important step for the company in China as the city also happens to be the base of Foxconn, an Apple production facility and its main supplier.
Per market observers, Apple will tend to gain from this shorter and more convenient logistic channel. Moreover, Henan with a population of near about 94 million offers a tempting market for Apple’s devices which the iPhone-maker would definitely like to explore, going forward.
Per a recent report from UBS, a famous investment banking firm, China is expected to account for 35% of total Apple’s shipments in the fourth quarter of fiscal 2014 as compared to 24% share from the U.S.
The new store happens to be the 13th store on the Chinese mainland directly run by Apple and the first in the heart of China. We believe that the new store will surely help Apple beef up its sales in China, thereby driving profitability of the company, going forward.
Apple believes that China is set to become a major contributor to its total revenues, going forward. Hence, the iPhone-maker intends to increase the number of its stores in China, from 13 currently to a whopping 40 within a short span of time.
We believe that these online stores will enable Apple to extend its foothold in the unexplored markets of various nations and thus prove to be an integral part of its international expansion-related activities.
We believe that Apple’s loyal customer base and innovative product pipeline are major positives. Moreover, the company’s entry into various new spheres such as health care, automobiles and others will boost top-line growth. However, stiff competition from the likes of Samsung, Hewlett-Packard (HPQ), Microsoft (MSFT), Amazon (AMZN) and Dell remains a headwind.
Currently, Apple has a Zacks Rank #2 (Buy).
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