TAIPEI: Traders seem decidedly unconcerned that Apple Inc’s largest supplier may deliver a nasty earnings report even though both companies have just had their worst sales performance in at least 15 years.

According to Bloomberg Gadfly analysis, short interest on Hon Hai Precision Industry Co is an average 27.4 million shares ahead of its fourth-quarter profit announcement, expected as soon as yesterday afternoon Taipei time. That’s the lowest 10-day pre-earnings average since the first quarter of 2015.

Apple, which accounts for half of Hon Hai’s sales, recorded its first revenue decline since 2001 last year. The Taiwanese company, also known as Foxconn, had its first annual sales drop on record.

Short interest is now down to levels not seen since June 2015, when Hon Hai was wrapping up its third consecutive quarter of net income growth exceeding 27%. Earnings went on to fall for four of the next five quarters.

Despite being Taiwan’s second-largest company, Hon Hai refuses to hold investor conferences, issue an outlook or even provide a revenue breakdown. That opacity creates a black box for investors and analysts, with an average earnings surprise of 14.1%. Stock reaction has been most severe when analysts who updated their estimates in the lead up to earnings were most caught out.

This quarter, sell-side analysts have raised their net income estimate by 2.7% over the past four weeks. If short interest is any indication, traders also remain confident. Now it’s just up to Hon Hai not to disappoint. — Bloomberg