JCY likely to maintain strong earnings in Q2

HUGE SURGE: Net profit rose by more than twentyfold to RM162 million in first quarter from RM7 million previously

JCY International Bhd's second-quarter earnings could be as strong as its first-quarter figures.

Southeast Asia's largest technology company is expected to release its second-quarter earnings by the middle of next month.

"Our production output should be on target," said JCY finance director, James Wong, in an interview with Business Times recently.

He added that the company has been doing well in the current quarter (second quarter), subject to external factors such as fluctuations in the currency markets.
In the first quarter ended December 31 2011, JCY's net profit surged more than twentyfold to RM162 million from RM7 million in the same period a year ago.

The huge surge was attributed to the flash floods in Thailand which had caused havoc to hard disk-drive (HDD) component manufacturers based in the kingdom.

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JCY Q1 profit soars 20-fold to RM162m

Kuala Lumpur: Hard disk drive (HDD) component manufacturer JCY International Bhd’s net profit soared more than 20-fold to RM162 million for the first quarter ended December 31, 2011 from RM7 million in the same period previously.

The company is confident the current earnings is sustainable this year as it continues to benefit from high HDD orders at good
prices as a result of the floods in Thailand last October.

Read more: JCY Q1 profit soars 20-fold to RM162m

Taiwan PC Makers Post Profit Rises

By LORRAINE LUK And TING-I TSAI

TAIPEI—Taiwan's major personal-computer makers—Acer Inc., Compal Electronics Inc. and Quanta Computer Inc.—reported rises in second-quarter net profit, helped by a recovery in demand for electronic products.

But Quanta offered a cautious outlook for the second half, in an indication that growth may be slowing due to economic uncertainties in the U.S. and Europe.

Analysts say that PC manufacturers' profit margins continue to be pressured by their growing exposure to low-cost products such as netbooks—laptops that can conduct basic Internet and computing functions—and rising price competition from rivals. Quanta President C.C. Leung said increasing competition will continue to pressure the company's gross margin for the remainder of this year and next year.

Market research firm Gartner on Tuesday reduced its forecast for PC shipment growth in the second half by about two percentage points to 15.3% due to the uncertain economic outlook in the U.S. and Western Europe. But for the full year, Gartner expects world-wide PC shipments to rise 19% to 367.8 million units from 308.3 million units in 2009.

"The slow pace of economic recovery and austerity measures in Europe have made PC suppliers very cautious in 2010. However, consumer demand is likely to remain strong even if the economic recovery stalls because consumers now view the PC as a relative 'necessity' rather than a 'luxury' and will continue to spend on PCs, even at the expense of other consumer electronic devices," said Ranjit Atwal, research director at Gartner.

Acer, the world's second largest personal-computer maker by shipments after Hewlett-Packard Co., said its audited net profit for the three months ended June 30 rose 55% to 3.6 billion New Taiwan dollars (US$112.4 million) from NT$2.3 billion a year earlier. Revenue rose 26% to NT$150.3 billion from NT$119.1 billion.

Quanta, the world's largest contract maker of notebook PCs by revenue, said its net profit for the three months ended June 30 rose 4% to NT$5.1 billion (US$159.4 million), or NT$1.35 a share, from NT$4.9 billion, or NT$1.34 a share, a year earlier. But the result fell short of analysts' expectations of NT$5.3 billion. Consolidated revenue in the second quarter rose 63% to NT$295 billion from NT$181.1 billion.

Quanta said it expects shipments in the third quarter to be flat or drop slightly from the 13.7 million units it shipped in the previous three months because of softening demand from developed markets such as Europe and the U.S. But the company maintained its target of growing its full-year shipment by 40% to 50 million laptops this year.

"We will improve our cost structure and ramp up our revenue from non-notebook products such as mobile computing devices to mitigate the gross margin pressure," said Chief Financial Executive Elton Yang at a press briefing.

Quanta said its second-quarter gross margin fell sharply to 3.4% from 6.2% a year earlier due to rising component costs and higher marketing expenses for new products.

Compal Electronics, the world's second-largest contract maker of notebook computers by revenue after Quanta Computer, said its second-quarter net profit nearly doubled from a year earlier due to strong demand for notebook computers. Compal reported a net profit of NT$6.44 billion (US$200.9 million) for the three months ended June 30, up from NT$3.24 billion a year earlier and beating analysts' expectations. Revenue rose 78% to NT$217.06 billion from NT$121.90 billion a year earlier.

Write to Lorraine Luk at lorraine.luk@dowjones.com

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Dell, HP profits rise, wave off slowdown fears

SAN FRANCISCO: Dell Inc and Hewlett-Packard Co dismissed worries about weakening tech demand, reporting broad-based strength from corporate customers and only hints of weakness from consumers.

Both faced questions on Thursday, Aug 19 about the strength of the recovery in spending on TECHNOLOGY [], after Cisco Systems Inc CEO John Chambers' warned about "unusual uncertainty" in the global economy.

Analysts said fears persisted about the strength of any recovery in consumer spending, as growth moderates in Europe and China as well as in the United States.

But executives from the two largest U.S. personal computer makers waved off such fears.

"We saw better-than-normal quarterly seasonality, as well as good balanced performance across all of our three regions," said Cathie Lesjak, HP's interim chief executive, on a conference call with the media.

Dell beat Wall Street's profit and revenue estimates, and said it expected a continued pick-up in demand for PCs from corporate customers for the next several quarters. But the company's gross profit margin lagged Wall Street expectations and its shares fell in after-hours trading.

HP -- posting its first quarterly report since the ouster of CEO Mark Hurd -- said earnings rose 6 percent as expected, helped by strength in servers and personal computers.

Storage and server revenue rose 19 percent, while PC revenue rose 17 percent. Lesjak did not point to any particular weakness in the market, other than in consumer notebooks.

"People were spooked after Cisco cited uncertainty and now people are more concerned about how the rest of the year will play out," said Morningstar analyst Michael Holt.

REFRESH CONTINUES

On the corporate side, Dell Chief Financial Officer Brian Gladden said the refresh cycle was proceeding as forecast, adding that he expects component costs to start to come down in the fiscal third and fourth quarters.

Dell said it expected demand for PCs among corporate customers to continue for the "next several" quarters. It said it expects "seasonal improvements" in the third quarter, thanks to sales to the federal government and business customers, with a resulting "pick-up in the low single digits."

"This is a pretty stretched-out cycle and we think it'll continue for several quarters," he said in an interview with Reuters. For the fiscal second quarter, "commercial growth was really the key for us, servers, networking systems, storage, services. That was up about 43 percent."

Apart from questions about the strength of the global tech recovery, HP executives are also likely to field queries on its CEO search, officially launched Wednesday and encompassing both internal and external candidates.

HP, the world's largest technology company by revenue, forced out Hurd on Aug. 6 for expense account irregularities related to a female contractor. Hurd, CEO since 2005, had been credited with reviving the company's fortunes.

HP shares have fallen about 12 percent since Hurd left. The stock closed at $40.76 on the New York Stock Exchange, and dropped to $40.50 after hours.

Shares of Round Rock, Texas-based Dell, which are down roughly 31 percent since April, fell 2.6 percent to $11.73 in extended trading. - Reuters

Stocks see broad gains; Industrials, tech climb

Industrial, technology stocks lift market on signs of increasing demand; euro extends climb

NEW YORK (AP) -- Industrial and technology stocks pulled the market sharply higher Tuesday after Boeing Co. said it was boosting production and an industry group forecast that demand for computers would increase.

The Dow Jones industrial average rose about 150 points in afternoon trading. The Dow and other major stock indexes rose more than 1.5 percent.

The advance in U.S. stocks was broad, but industrials made some of the biggest moves. Boeing Co. rose 3.3 percent after increasing production of the 737 jet. Boeing said customers are adding to existing orders and placing new ones. Illinois Tool rose about 1.4 percent after it raised the lower end of its fiscal second-quarter earnings target.

Meanwhile, the New York Federal Reserve regional manufacturing expanded has expanded for an 11th straight month in June.

"We're still seeing factories and manufacturing help provide a little stimulus for the economy here," said Michael Church, president at Addison Capital Group in Philadelphia.

Technology stocks got a boost after research firm International Data Corporation said it expects the personal computer market will grow 20 percent this year. Chipmaker Intel Corp. climbed 2.4 percent.

A gain in the euro and a drop in the dollar signaled that traders around the world are less worried that debt problems in Europe will disrupt a global recovery. The euro rose to $1.2319 after climbing Monday.

The falling dollar boosted prices of commodities including oil. Commodities become more affordable for overseas buyers when the dollar falls. The rise in oil lifted energy stocks. Oil services company Halliburton Inc. rose 5.4 percent.

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Two Penang HDD parts makers re-investing this year

Monday June 14, 2010 By DAVID TAN davidtan@thestar.com.my

GEORGE TOWN: Two Penang-based hard-disk drive (HDD) component makers, Eng Teknologi Holdings Bhd and Dufu Technology Corp Bhd, are re-investing this year.

Their move comes as Seagate and Western Digital, the two major producers of HDD products, are allocating US$750mil each for capital expenditure (capex) this year. The amount represents an increase of 15.4% and 36.4% respectively for the two companies.

According to a recent broker report, both Seagate and Western Digital are increasing capex to support demand, “as inventory levels at their original equipment and distribution customers remained at nearly all-time lows across all geographic regions and product offerings.”

The global demand for HDD products is also expected to hit over 671million units this year compared with over 557 million in 2009.

Eng Teknologi is allocating about RM100mil to expand its operations in Malaysia, Thailand, and China this year and next.
Dufu Technology Corp Bhd, on the other hand, is pumping RM12mil to increase production of HDD components, such as clamps and spacers, at its plant in Bayan Lepas Industrial Estate.

Eng Teknologi group chief executive officer Datuk Y.K. Teh told StarBiz that the expansion would increase the group’s production capacity of HDD components, comprising base-plates, separators and actuators, to 154.7 million pieces this year compared with 96.7 million in 2009.

“In 2011, the group’s production of HDD components would go up to 201.4 million pieces.

“The world’s shipment of HDD is likely to surpass 600 million drives for 2010, compared with about 557 million in 2009. In 2011, shipments are likely to hit 742.7 million,” he said.

Teh said over 50% of the group’s HDD components were supplied to Western Digital, which recently announced it would invest about US$1.2bil in Penang.

He said the group had planned for its industrial product business to contribute about 30% to revenue by 2014, as the segment was less volatile.

For the first quarter ended March 2010, the group posted net profit of RM18.3mil on a revenue of RM153mil, compared with RM71mil and RM100mil respectively a year earlier.

Dufu chief executive officer P. Y. Yong told StarBiz that the expansion exercise would enable the group to increase annual production by 10% over last year’s 150 million pieces of clamps and spacers.

For its fiscal first quarter ended March 2010, sales of HDD components brought in RM26mil in revenue and accounted for 80% of total revenue of RM33mil. In the same period last year, it made RM20mil from the sale of HDD components.

“The market is coming mainly from China, Thailand, and Singapore, where about 80% of the group’s sales are generated,” he said.

Yong said the market for HDD products had reached a peak somewhat due to the crisis in Europe.

“We do not expect production of HDD products in the third quarter 2010 to exceed very much that of last year’s third quarter,” he said.

The group supplies HDD components to Western Digital, Seagate and Hitachi.

JCY

Western Digital to invest US$1.2b in Malaysia

Disk-drive maker Western Digital will spend US$1.2 billion over the next five years to expand its operations in Malaysia, a move that could boost foreign investments in this Southeast Asian country.

Western Digital’s new investments will include expanding its research and development as well as manufacturing facilities, the Malaysian prime minister’s office said in a statement on today.

“Construction is planned to be completed by the third quarter of 2011 and the facility will be ramped to full capacity over the following five years,” the statement said. “ There will be up to 10,000 additional jobs.”

The announcement comes about two months after another multi-national company, Coca-Cola Co, said it would expand its investment by US$300 million in this trade-dependent country.

Malaysia is seeking to win foreign investment to help offset recent large investment outflows. In 2009, it recorded a net outflow of direct investment of RM24.9 billion after an outflow of RM26.1 billion in 2008 as Malaysian companies went overseas to invest.

Prime Minister Datuk Seri Najib Razak had in March launched the country’s new economic model to boost economic growth so that Malaysia achieves income levels of a “rich nation” by doubling the US$7,000 per capita income currently.

Economists have said that private investments, which remain at about 12 percent of gross domestic product, would have to increase substantially if Malaysia was to achieve its economic goals. - Reuters

Read more: Western Digital to invest US$1.2b in Malaysia
Western Digital and JCY International - OSK
Western Digital and JCY International - Kenanga
CIMB Research has Outperform on JCY, target price RM2.68

JCY INTERNATIONAL BERHAD

JCY International Bhd – JCY (5161) is a Malaysia-based company. It is a global manufacturer of hard disk drive (HDD) mechanical components. JCY manufactures base plates, top cover assembly, actuator pivot flex assembly (APFA) and antidiscs, which are the mechanical components of HDDs. The Company’s manufacturing facilities are located in the states of Johor, Penang and Malacca, in Malaysia, and in Saraburi, Thailand. The Company’s subsidiaries include JCY HDD Technology Sdn Bhd (JCY HDD Malaysia), JCY HDD Technology Pte Ltd (JCY HDD Singapore) and Minarex Holdings Limited (Minarex Holdings (Mauritius)).

Financial Results
Volume Distribution Charts

JCY rises on CIMB Research upgrade RM2.68 target price

KUALA LUMPUR: Shares of JCY International Bhd rose on Tuesday, April 20, after CIMB Research initiated coverage of the hard-disk drive (HDD) manufacturer with an Outperform call and RM2.68 target price.

At 3.57pm, JCY was up four sen to RM1.76 with 4.1 million shares done.

CIMB Research said JCY is one of the most profitable and biggest HDD mechanical component makers in the world and accorded a target price of RM2.68, based on 12 times CY11 price-to-earnings.

"JCY should trade at least close to the current 13.5 times CY11 P/E for the FBM KLCI and a premium over the verage 11 times CY11 P/E for its global peers (range of 4.0 times to 18 times) given its healthy earnings prospects, above-industry returns and size, as well as decent dividend yields.

"Our 12 times target P/E also places it within the range that private equity firms and rivals paid in 2007-08 for some smaller SGX-listed HDD component suppliers," it said.

JCY International

bullish-gravestone-doji-candlestick

CIMB Bank to issue 50m CWs each on JCY, MAS, Supermax, MPHB

KUALA LUMPUR: CIMB Bank Bhd has issued 50 million European-style call warrants (CWs) each over the shares of JCY International Bhd, MALAYSIAN AIRLINE SYSTEM BHD [] (MAS), Supermax Corp Bhd and MULTI-PURPOSE HOLDINGS BHD [] (MPHB).

According to several announcements made by CIMB Bank Bhd on Monday, the tentative listing date is Tuesday, March 9 and the expiry date is March 10, 2011.

The exercise ratio is two JCY CWs for every one shares while the exercise price is RM1.35, which is 92.47% of the closing price of the shares on the price-fixing date on Feb 25 of RM1.46. The issue price for the JCY-CW is 15 sen.

As for the MAS-CW, the exercise ratio is two CWs to one MAS share and the exercise price is RM2, being 96.15% of the closing price on the price-fixing date of Feb 25 of RM2.08. The issue price for the MAS-CW is 18 sen.

On the Supermax-CW, the exercise ratio is eight CWs to one Supermax share and the exercise price is RM5.60, which is 95.08% of the closing price on Feb 25. The issue price for the Supermax-CW is 17.5 sen.

It said the MPHB-CW's exercise ratio is two CWs to one share and the exercise price is RM1.80, which is 93.26% of the closing price on Feb 25. The issue price is 17.5 sen.

Folliwing the issuance of the four CWs, the number of CWs issued by CIMB Bank is 79.