JCY’s 1QFY13 core loss of MYR33m took us and consensus by surprise. The
company did not declare a dividend for the quarter under review. We are slashing
our FY13/FY14 forecasts for MYR158m/MYR152m in core earnings to core losses of
MYR83m/MYR71m respectively. We are also changing our valuation from 4.5x FY13
PE to 0.7x CY13 P/NTA. Maintaining SELL, with our FV unchanged at MYR0.35.
Seeing red. JCY’s financial results were below expectations. Although the company’s 1QFY13 revenue was marginally below our/consensus’ full forecasts by about 5%/8%, it registered a core loss of MYR33m versus our/consensus’ estimates for core earnings of about MYR40m/MYR53m per quarter. Note that this is the first time JCY, which had previously reaped the benefits of a sector recovery following the Thai floods in 1QFY12, has fallen into the red. More worrying is that its 1QFY13 revenue contracted by 30% q-o-q (-33% y-o-y), pulling its profit margins into negative territory (EBITDA /PBT/core earnings margins stood at 0%/-7%/-9% respectively). It did not declare a dividend for the quarter.
Hit by lower shipments & ASP, and higher COS. In its results announcement, JCY’s management highlighted several points, including: i) a reduction in volume shipped, and ii) moderating average selling prices (ASPs) of its products, leading to a revenue decline in 1QFY13. As for its profit decline, it said cost of sales (COS) went up due to tighter quality requirements from its customers, resulting in lower yields per output.
Maintain SELL, FV unchanged at MYR0.35. We are slashing our FY13/FY14 core earnings forecasts of MYR158m/152m to a core loss of MYR83m/71m respectively. The longer term outlook for the HDD sector seems gloomy given the tepid demand for PCs as consumers opt for electronic gadgets like smartphones and tablets. Also, the recent increases in minimum wage in Malaysia and Thailand had not been kind to JCY. That said, we are switching our valuation from a 4.5x FY13 PE to 0.7x CY13 P/NTA, based on the following updated forecasts: i) for a core loss in FY13-FY14, and ii) removing the earnings volatility by switching to a valuation based on balance sheet variables. All said, we are maintaining our SELL call on the stock, with an unchanged FV of MYR0.35.
company did not declare a dividend for the quarter under review. We are slashing
our FY13/FY14 forecasts for MYR158m/MYR152m in core earnings to core losses of
MYR83m/MYR71m respectively. We are also changing our valuation from 4.5x FY13
PE to 0.7x CY13 P/NTA. Maintaining SELL, with our FV unchanged at MYR0.35.
Seeing red. JCY’s financial results were below expectations. Although the company’s 1QFY13 revenue was marginally below our/consensus’ full forecasts by about 5%/8%, it registered a core loss of MYR33m versus our/consensus’ estimates for core earnings of about MYR40m/MYR53m per quarter. Note that this is the first time JCY, which had previously reaped the benefits of a sector recovery following the Thai floods in 1QFY12, has fallen into the red. More worrying is that its 1QFY13 revenue contracted by 30% q-o-q (-33% y-o-y), pulling its profit margins into negative territory (EBITDA /PBT/core earnings margins stood at 0%/-7%/-9% respectively). It did not declare a dividend for the quarter.
Hit by lower shipments & ASP, and higher COS. In its results announcement, JCY’s management highlighted several points, including: i) a reduction in volume shipped, and ii) moderating average selling prices (ASPs) of its products, leading to a revenue decline in 1QFY13. As for its profit decline, it said cost of sales (COS) went up due to tighter quality requirements from its customers, resulting in lower yields per output.
Maintain SELL, FV unchanged at MYR0.35. We are slashing our FY13/FY14 core earnings forecasts of MYR158m/152m to a core loss of MYR83m/71m respectively. The longer term outlook for the HDD sector seems gloomy given the tepid demand for PCs as consumers opt for electronic gadgets like smartphones and tablets. Also, the recent increases in minimum wage in Malaysia and Thailand had not been kind to JCY. That said, we are switching our valuation from a 4.5x FY13 PE to 0.7x CY13 P/NTA, based on the following updated forecasts: i) for a core loss in FY13-FY14, and ii) removing the earnings volatility by switching to a valuation based on balance sheet variables. All said, we are maintaining our SELL call on the stock, with an unchanged FV of MYR0.35.
Source: OSK
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