KUALA LUMPUR: CIMB Equities Research has upgraded hard disk drive manufacturer JCY International Bhd to a Trading Buy for gradual earnings recovery in 2012.
It said on Tuesday, Aug 16 that looking beyond the likely release of poor 3QFY9/11 results on Aug 19, it upgraded JCY from Neutral to Trading Buy as the stock is trading below its CY11 projected book value.
'Following the recent sharp decline in its share price along with the depressed market, we see value in the stock even though we scale back our target price from 72 sen to 58 sen (8 times CY12 P/E) as we cut our FY11-13 EPS forecasts by 13%-22% for lower gross margins from a weaker US$, higher wages and lower ASP,' it said.
CIMB Research said JCY should start to see the benefits of higher volume from WD's merger with HGST and Seagate's merger with Samsung in 4Q11, which should lead to a gradual improvement in earnings. This, in its view, is the main re-rating catalyst.
It said on Tuesday, Aug 16 that looking beyond the likely release of poor 3QFY9/11 results on Aug 19, it upgraded JCY from Neutral to Trading Buy as the stock is trading below its CY11 projected book value.
'Following the recent sharp decline in its share price along with the depressed market, we see value in the stock even though we scale back our target price from 72 sen to 58 sen (8 times CY12 P/E) as we cut our FY11-13 EPS forecasts by 13%-22% for lower gross margins from a weaker US$, higher wages and lower ASP,' it said.
CIMB Research said JCY should start to see the benefits of higher volume from WD's merger with HGST and Seagate's merger with Samsung in 4Q11, which should lead to a gradual improvement in earnings. This, in its view, is the main re-rating catalyst.
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