KUALA LUMPUR: Spurred by JCY International Bhd’s profit guidance announcement last Thursday, other hard disk drive (HDD) players also saw rising investor interest in their companies, sending share prices higher.
Dufu Technology Corp Bhd, Eng Teknologi Holdings Bhd (EngTek) and Notion VTEC Bhd all saw their share prices end last week on a higher note; in particular, Dufu and EngTek with substantial volumes of shares changing hands.
To recap, JCY guided that its net profit for first quarter ended Dec 31, was expected to see a year-on-year leap of around 1,900%. This was the result of a handful of factors including the strengthening US dollar, better cost management and product mix.
However, the main driver for the improved results was the floods in Thailand last November. While a number of HDD component manufacturers were hit, JCY’s facility was spared.
As a result, there was also a surge in renewed interest in other HDD manufacturers as the industry works to normalise its production output in the wake of the floods.
“The positive sentiment from JCY’s profit guidance has spilled over to the other players. Now with average selling prices higher, it could mean a bump in earnings for other players if they managed to capitalise on the fact,” said an industry observer.
Last Friday, Dufu closed 1.5 sen higher at 36.5 sen with some 2.98 million shares done.
It was a similar story for EngTek, which had traded at around RM1.55 for most of December. EngTek’s share price ended 15 sen higher last Friday at RM1.69, with some 2.85 million shares traded.
However, Notion VTec did not manage to gain as much interest as the other companies although its share price did close higher at RM1.82 last Friday with around 131,500 shares traded. At the beginning of Dec 2011, its share price traded around the RM1.55 mark.
This could have been due to the fact that Notion VTec mostly deals in the manufacturing of camera parts compared to the rest that manufacture parts for other electronic gadgets.
However, the question now is how long the rally in JCY’s share price is expected to continue. In addition, while JCY came out of the affair unscathed, it is uncertain whether Dufu and EngTek would share the same fortunes.
The floods in Thailand had disrupted the HDD supply chain badly, with many analysts opining that the situation would only be resolved in another six months. It resulted in many of the big players writing off not only their inventories but also machines.
In a recent interview, JCY’s non-independent executive director James Wong said that the company expected to see the average selling prices to remain at the current levels for sometime as the supply chain rights itself. In fact, JCY announced that it would be spending around RM300 million over the next 24 months to upgrade its factory and increase production.
However, the real impact on earnings will only be seen in the coming months as the companies announce their results for the last quarter of 2011.
This article appeared in The Edge Financial Daily, January 9, 2012.
Dufu Technology Corp Bhd, Eng Teknologi Holdings Bhd (EngTek) and Notion VTEC Bhd all saw their share prices end last week on a higher note; in particular, Dufu and EngTek with substantial volumes of shares changing hands.
To recap, JCY guided that its net profit for first quarter ended Dec 31, was expected to see a year-on-year leap of around 1,900%. This was the result of a handful of factors including the strengthening US dollar, better cost management and product mix.
However, the main driver for the improved results was the floods in Thailand last November. While a number of HDD component manufacturers were hit, JCY’s facility was spared.
As a result, there was also a surge in renewed interest in other HDD manufacturers as the industry works to normalise its production output in the wake of the floods.
“The positive sentiment from JCY’s profit guidance has spilled over to the other players. Now with average selling prices higher, it could mean a bump in earnings for other players if they managed to capitalise on the fact,” said an industry observer.
Last Friday, Dufu closed 1.5 sen higher at 36.5 sen with some 2.98 million shares done.
It was a similar story for EngTek, which had traded at around RM1.55 for most of December. EngTek’s share price ended 15 sen higher last Friday at RM1.69, with some 2.85 million shares traded.
However, Notion VTec did not manage to gain as much interest as the other companies although its share price did close higher at RM1.82 last Friday with around 131,500 shares traded. At the beginning of Dec 2011, its share price traded around the RM1.55 mark.
This could have been due to the fact that Notion VTec mostly deals in the manufacturing of camera parts compared to the rest that manufacture parts for other electronic gadgets.
However, the question now is how long the rally in JCY’s share price is expected to continue. In addition, while JCY came out of the affair unscathed, it is uncertain whether Dufu and EngTek would share the same fortunes.
The floods in Thailand had disrupted the HDD supply chain badly, with many analysts opining that the situation would only be resolved in another six months. It resulted in many of the big players writing off not only their inventories but also machines.
In a recent interview, JCY’s non-independent executive director James Wong said that the company expected to see the average selling prices to remain at the current levels for sometime as the supply chain rights itself. In fact, JCY announced that it would be spending around RM300 million over the next 24 months to upgrade its factory and increase production.
However, the real impact on earnings will only be seen in the coming months as the companies announce their results for the last quarter of 2011.
This article appeared in The Edge Financial Daily, January 9, 2012.
