KUALA LUMPUR: After seeing its share price double over two months, hard disk drive component maker JCY International Bhd guided that net profit for the first quarter ended Dec 31, 2011 (1QFY12) would likely jump 19-fold year-on-year as sales benefited from a supply shortage caused by the floods in Thailand.
In a statement to Bursa Malaysia yesterday, JCY said net profit for 1QFY12 “is likely to increase” approximately 1,900% from the RM7.5 million booked in 1QFY11 or up 460% from the RM26.4 million booked in the immediate preceding quarter ended Sept 30, 2011.
That means JCY may report a net profit of about RM120 million to RM150 million for 1QFY12, back-of-the-envelope calculations showed. It has until end-February to release unaudited numbers.
“We wanted the public and minority shareholders to know and have access to factors surrounding JCY’s profitability,” JCY’s finance director James Wong told The Edge Financial Daily. “We and others in the industry saw an increase in average selling prices [ASP] of about 10% to 20% after the [Thai] floods.”
Apart from the higher selling prices caused by component shortages following the October 2011 floods, JCY said the higher net profit for 1QFY12 that ended just a few days ago, also benefited from an effective product mix, efficient cost management and the US dollar’s appreciation versus the ringgit.
To cater to an expected increase in demand from its major customers, JCY’s board had approved a RM300 million capital expenditure to expand its facilities in Malaysia, Thailand and China over the next 24 months.
“Some 80% of the money will be used to buy machinery,” Wong said, adding that JCY would fund the capital expenditure through internal funds and borrowings.
“The RM300 million will be spent evenly over two years,” he said, adding that the money would help increase total capacity by about 30% to 40%.
“Barring unforeseen circumstances, the company expects to increase its global market share of HDD mechanical component industry over the next 24 months,” its statement read.
Both shares and call warrants in JCY emerged among yesterday’s most actively traded with a volume of 31.16 million shares and 50.59 million units respectively.
Its stock traded between RM1.10 and RM1.20 before closing at RM1.18 yesterday, up three sen or 2.6%, its highest since August last year.
That’s just shy of a RM1.30 price target that OSK Research set for JCY when upgrading the stock from “sell” to “trading buy” on Dec 22, 2011, Bloomberg data showed.
Its call warrants, JCY-CD, closing one sen higher to 58 sen, had an intra-day high of 60.5 sen and low of 54.5 sen yesterday.
Since October, shares in JCY, from a level of around 40 sen, have been on an upward trend on optimism that JCY could benefit from the floods as prices of HDD and components are expected to increase from the disrupted supply chain.
As JCY supplies mainly to HDD giants, Seagate Technology plc and Western Digital Corp, industry observers had said it was set to profit from an increase in ASP.
The global HDD sector was badly affected by the floods in Thailand because a huge portion of the supply chain is situated in the country’s worst hit areas. Although Seagate was mostly unaffected, Western Digital, which has some 60% of its HDD produced in Thailand, announced a halt to its production in Thailand.
In a statement to Bursa Malaysia yesterday, JCY said net profit for 1QFY12 “is likely to increase” approximately 1,900% from the RM7.5 million booked in 1QFY11 or up 460% from the RM26.4 million booked in the immediate preceding quarter ended Sept 30, 2011.
That means JCY may report a net profit of about RM120 million to RM150 million for 1QFY12, back-of-the-envelope calculations showed. It has until end-February to release unaudited numbers.
“We wanted the public and minority shareholders to know and have access to factors surrounding JCY’s profitability,” JCY’s finance director James Wong told The Edge Financial Daily. “We and others in the industry saw an increase in average selling prices [ASP] of about 10% to 20% after the [Thai] floods.”
Wong: Some 80% of the money will be used to buy machinery.
Apart from the higher selling prices caused by component shortages following the October 2011 floods, JCY said the higher net profit for 1QFY12 that ended just a few days ago, also benefited from an effective product mix, efficient cost management and the US dollar’s appreciation versus the ringgit.
To cater to an expected increase in demand from its major customers, JCY’s board had approved a RM300 million capital expenditure to expand its facilities in Malaysia, Thailand and China over the next 24 months.
“Some 80% of the money will be used to buy machinery,” Wong said, adding that JCY would fund the capital expenditure through internal funds and borrowings.
“The RM300 million will be spent evenly over two years,” he said, adding that the money would help increase total capacity by about 30% to 40%.
“Barring unforeseen circumstances, the company expects to increase its global market share of HDD mechanical component industry over the next 24 months,” its statement read.
Both shares and call warrants in JCY emerged among yesterday’s most actively traded with a volume of 31.16 million shares and 50.59 million units respectively.
Its stock traded between RM1.10 and RM1.20 before closing at RM1.18 yesterday, up three sen or 2.6%, its highest since August last year.
That’s just shy of a RM1.30 price target that OSK Research set for JCY when upgrading the stock from “sell” to “trading buy” on Dec 22, 2011, Bloomberg data showed.
Its call warrants, JCY-CD, closing one sen higher to 58 sen, had an intra-day high of 60.5 sen and low of 54.5 sen yesterday.
Since October, shares in JCY, from a level of around 40 sen, have been on an upward trend on optimism that JCY could benefit from the floods as prices of HDD and components are expected to increase from the disrupted supply chain.
As JCY supplies mainly to HDD giants, Seagate Technology plc and Western Digital Corp, industry observers had said it was set to profit from an increase in ASP.
The global HDD sector was badly affected by the floods in Thailand because a huge portion of the supply chain is situated in the country’s worst hit areas. Although Seagate was mostly unaffected, Western Digital, which has some 60% of its HDD produced in Thailand, announced a halt to its production in Thailand.
