Wednesday, December 28, 2011

JCY climbs to 13-month at midday on strong HDD demand

KUALA LUMPUR (Dec 28): Shares of JCY International Bhd rose to a 13'' month high at midday on Wednesday on sustained buying interest as the hard disk drive (HDD) manufacturer was not affected by the recent severe Thai floods and due to strong demand.

At midday, it was up 3.5 sen to RM1. There were 17.19 million shares transacted at prices ranging from 97 sen to RM1.01.

OSK Research had on Dec 23 upgraded the TECHNOLOGY [] sector a Neutral as the worst impact from the Thai floods should be over while restoration of production in Thailand was going on at full steam.

The research house had said it came to understand that Western Digital and Seagate had used this opportunity to push for higher prices of their HDD products (50%-100%) whilst cutting down warranty periods

' We are keeping our earnings forecasts unchanged for Engtek and Notion but revising our valuation from 0.7 times to 0.9 times price-to-book value. They are both upgraded to Neutral from Sell. Engtek at RM1.52 and Notion at RM1.69.

' As for JCY, we are raising our earnings forecast by more than 100% as their equipment was unscathed. Valuation switched from 0.9 times PBV to 8 times FY12 PER. Call upgraded to Trading Buy with FV of RM1.30. We understand that there are rumours of a strong price push over the next one month,' it said.


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