fair valur to 53 cents, used to be a darling stock.
OSK slashes JCY results forecast, puts TP at 35 sen
Business & Markets 2013
Written by Fatin Rasyiqah Mustaza of theedgemalaysia.com
Friday, 22 February 2013 15:44
KUALA LUMPUR (Feb22): OSK Research said it is slashing its results forecasts for JCY International Bhd after the company announced its latest weak results.
JCY reported RM33 million core loss in its first quarter financial results 2013 (1QFY13).
“We are slashing our financial year 2013 and 2014 core earnings forecasts of RM158 million and RM152 million to a core loss of RM83 million and RM71 million respectively”, the research house said.
OSK added that the longer term outlook for the hard disk drive (HDD) sector seems gloomy, given the tepid demand for personal computers as consumers opt for electronic gadgets like smartphones and tablets.
In addition, the recent increases in minimum wages in Malaysia and Thailand had not been kind to JCY.
It has maintained its "sell" call on JCY International Bhd with a target price of 35 sen. At 3.17 pm, JCY was transacted at 56 sen per unit, down 3 sen, on trades of 3.8 million shares.
“Although the company’s 1QFY13 revenue was marginally below our consensus’ full forecasts by about 5%-8%, it registered a core loss of RM33 million versus our consensus’ estimates for core earnings of about RM40 million-RM53 million per quarter”, OSK said.
“More worrying is that its 1QFY13 revenue contracted by 30% quarter-on-quarter, pulling its profit margins into negative territory”, it added.
The research house noted that this was the first time JCY, which had previously reaped the benefits of a sector recovery following the Thai floods in late 2011, has fallen into the red.