Monday, February 28, 2011

How Was JCY's Earnings?

I had posted on JCY a couple of times before.

On Aug 2010, I posted: Regarding JCY International ( recommended reading. :) )

** made the following remark then: =>

And on this Monday, 23 Aug 2010, CIMB writes again on JCY.
JCY has fallen to just 1.17. (Will it be a penny stock soon? :P )

JCY is now trading below 0.65

On Dec 2010, I made the following update. Quick Update on JCY's Earnings

I was amused by CIMB's numbers. These numbers, the earnings forecasts does play an important part. On one hand, some might argue that earnings forecasts is an impossible task but then if that's the case, why is the stock valued based on earnings forecasts which are super over optimistic?

  1. During IPO or April 2010: JCY earned some 207 million for its fy 2009. CIMB says times are good in 2010, so JCY should earn some 359 million. And 2011, JCY earnings will be even more super. JCY should earn some 441 million by then!
  2. 21 May 2010 - Target price lowered! fy 2010 earnings is now lowered to 297.3 million and fy 2011 earnings is now lowered to 370.8 million
  3. Monday, 23 Aug 2010 - CIMB to earn some 263 million for its fy 2010. And ....... for fy 2011, JCY is now projected to earn only 304.7 million

They marketed the stock based on an earnings estimate of 441 million. Yes, that's the IPO fair value projection. During IPO, April 2010, CIMB valued JCY target price of 2.68 based on 2011 earnings estimate of 441 million.

It's now only Dec 2010. CIMB has slashed JCY target price to just 0.92 based on 2011 earnings of just 168.8 million.

Now JCY announced its earnings last Friday.

Here's the very brief earnings numbers.

A first quarter earnings of only 7.512 million????


(Based on the above numbers and assuming that you did not know it was JCY, how would rate such a company?)

And what did CIMB project for JCY on Dec 2010? CIMB Research thought JCY could be earning some 168.8 million (despite 10 Q4 loss of 22.5 million) for fy 2011.

And this way below estimates.

This is what CIMB said in its report today..

  • Below; maintain NEUTRAL. JCY’s core net profit for 1QFY9/11, which excludes
    RM2.3m forex loss, tumbled 88% yoy to RM9.9m or just 4% of our full-year forecast
    and 6% of consensus estimates.
    It was 64% below our expectations, with the key
    variance being the slower-than-expected recovery of sales and margin. Although
    our estimates are already the lowest in the market,
    we are scaling back our FY11-13 forecasts by 22-34% as its performance suggests a slower recovery in sales and margins. Still applying 8x CY12 P/E, which we think is a fair P/E for HDD component suppliers, we cut our target price from RM0.92 to RM0.72.
    The stock remains a NEUTRAL until we see evidence of a gradual recovery in earnings.

An neutral call?

If you refer to Dec posting. Quick Update on JCY's Earnings
  • Yesterday, 1 Dec 2010, CIMB gave it a huge downgrade!
    JCY's target price which was 1.88 on 25 Nov 2010 was lowered to just 0.92!!!!!!!!!

JCY today is a neutral at 0.66 sen???

And for the info.. CIMB adjusted its fy 2011 earnings for JCY to just 112 million.


Remember during its IPO, CIMB boldly projected JCY's earnings for fy 2011 to be 441 million. That was just in April 2010.


And it was funny how CIMB said its estimates are already the lowest in the market!

Are CIMB Research serious? Are they reviewing the company or are they trying desperately to sell themselves?

And then I saw RHB's report (LOL! I knew right there and then, I need to make this posting).

*the couple of arrows drawn onto the report says it all*