KUALA LUMPUR: Malaysian hard disk drive (HDD) component manufacturers, JCY International Bhd and Dufu Technology Corp Bhd, saw a surge in buying interest in the two stocks in anticipation of major structural changes in the HDD sector following the Thai flooding.
Both JCY and Dufu are expected to benefit from the improved positioning of their main customer Seagate Technology plc following the flooding in Thailand. Seagate’s main competitor, Western Digital Corp (WD), the current top HDD producer in the world, has closed its operations because of the floods. But Seagate’s Thai manufacturing facilities, on the other hand, are unaffected by the floods and remain in operation, and Seagate is expected to overtake WD in production over the next few months.
JCY’s share price gained 3.5 sen or 6.1% to close at 60.5 sen, while trading volume surged five times to 52.13 million shares. It was the local bourse’s most actively traded stock. Dufu added three sen or 9.1% to 36 sen, with a volume of 6.83 million shares, a 14-fold increase from just 473,100 shares last Friday.
Seagate’s improved position also means that JCY and Dufu could take advantage of the potential global shortage of HDD. Also, the higher prices of parts could increase margins along the entire HDD value chain.
Industry observers expect the prices of HDDs and components to increase as a result of the disrupted HDD supply chain which will in turn hit original equipment manufacturers (OEMs) such as IBM, Dell and EMC in the coming months.
Seagate’s future prospects will be revealed today at a press conference by BS Teh, the group’s Asia Pacific and Japan senior vice-president and managing director, as he provides updates on Seagate’s Malaysian operations as well as the market outlook for the HDD industry.
With reports from Thailand already indicating prices of HDDs have increased by 20% to 25% in the past two weeks, both JCY and Dufu could see better prospects compared to their recent lacklustre financial performances.
JCY posted losses for its 3QFY11 ended June 30 due to a combination of lower selling prices, smaller sales volume and a weaker US dollar.
For its 2QFY11 ended June 30, Dufu’s net profit fell 75% year-on-year from RM605,000 to RM154,000, which it attributed to the strengthening of the ringgit as well as higher raw material prices.
Shares in Notion VTec Bhd, another HDD component player, gained just three sen or 1.8% to RM1.69 on a thin volume of 20,000 shares.
The Edge Financial Daily had noted in an article yesterday that in contrast to JCY and Dufu, Notion will likely be most affected by the Thai floods. Notion’s HDD sales are mostly to WD, while its sole camera customer, Nikon Corp Ltd, has also shut its operations in Thailand due to the floods.
This article appeared in The Edge Financial Daily, November 1, 2011.
Both JCY and Dufu are expected to benefit from the improved positioning of their main customer Seagate Technology plc following the flooding in Thailand. Seagate’s main competitor, Western Digital Corp (WD), the current top HDD producer in the world, has closed its operations because of the floods. But Seagate’s Thai manufacturing facilities, on the other hand, are unaffected by the floods and remain in operation, and Seagate is expected to overtake WD in production over the next few months.
JCY’s share price gained 3.5 sen or 6.1% to close at 60.5 sen, while trading volume surged five times to 52.13 million shares. It was the local bourse’s most actively traded stock. Dufu added three sen or 9.1% to 36 sen, with a volume of 6.83 million shares, a 14-fold increase from just 473,100 shares last Friday.
Seagate’s improved position also means that JCY and Dufu could take advantage of the potential global shortage of HDD. Also, the higher prices of parts could increase margins along the entire HDD value chain.
Industry observers expect the prices of HDDs and components to increase as a result of the disrupted HDD supply chain which will in turn hit original equipment manufacturers (OEMs) such as IBM, Dell and EMC in the coming months.
Seagate’s future prospects will be revealed today at a press conference by BS Teh, the group’s Asia Pacific and Japan senior vice-president and managing director, as he provides updates on Seagate’s Malaysian operations as well as the market outlook for the HDD industry.
With reports from Thailand already indicating prices of HDDs have increased by 20% to 25% in the past two weeks, both JCY and Dufu could see better prospects compared to their recent lacklustre financial performances.
JCY posted losses for its 3QFY11 ended June 30 due to a combination of lower selling prices, smaller sales volume and a weaker US dollar.
For its 2QFY11 ended June 30, Dufu’s net profit fell 75% year-on-year from RM605,000 to RM154,000, which it attributed to the strengthening of the ringgit as well as higher raw material prices.
Shares in Notion VTec Bhd, another HDD component player, gained just three sen or 1.8% to RM1.69 on a thin volume of 20,000 shares.
The Edge Financial Daily had noted in an article yesterday that in contrast to JCY and Dufu, Notion will likely be most affected by the Thai floods. Notion’s HDD sales are mostly to WD, while its sole camera customer, Nikon Corp Ltd, has also shut its operations in Thailand due to the floods.
This article appeared in The Edge Financial Daily, November 1, 2011.
