Wednesday, November 30, 2011

A Look At JCY's 'Earnings Turnaround'

JCY reported its earnings last night. It did MUCH BETTER than I had expected.

From the edge:

  • JCY records turnaround with 4Q net profit of RM26.4m
    Written by Joseph Chin of
    Tuesday, 29 November 2011 18:16

    KUALA LUMPUR (Nov 29): Hard-disk drive manufacturer JCY International Bhd posted net profit of RM26.44 million in the fourth quarter ended Sept 30, 2011, boosted by higher shipments and a favourable US dollar exchange.
    It said on Tuesday that the fourth quarter financial performance was a turnaround from the net loss of RM25.18 million a year ago. Rrevenue dipped 1.5% to RM439.92 million from RM474.71 million while earnings per share were 1.29 sen compared with loss per share of 1.23 sen.

    JCY said when compared with the third quarter, its revenue rose 11.3% while profit before tax of RM26.4 million was also a turnaround from the pre-tax loss of RM31.8 million in the third quarter.

    For the 12-month period, its earnings plunged 92% to RM14.55 million from RM173.76 million in the previous financial year. Its revenue fell 17.8% to RM1.671 billion from RM2.033 billion.

    Elaborating on the fourth quarter performance, it said the increase in turnover was due to the overall increase in revenues arising mainly from increases in the shipment quantity and favourable US dollar exchange rates.

    “The cost of sales decreased despite the increase in the overall sales due to efficient cost management and improvement in output through the better yield and improvements in operational efficiency,” it said.

    JCY group chairman Dr Rozali Mohamed Ali said the results were satisfactory given the challenging business environment.

    “We are very comfortable with our improvement in the operational efficiency, and we will continue to focus our efforts in improving our yields to maintain our sustainable profit improvement for the next financial year,” he added.

    JCY is fortunate as its facilities in Thailand were not affected by the recent flooding. JCY continues to operate at full capacity in Thailand.

    Rozali said JCY was taking a number of steps to increase its output from its factories in Malaysia and elsewhere, including restructuring its production output and product mix, and accelerating its expansion for its plants in China.

    “We will continue to work closely with our key customers to meet their requirements for our HDD components over the next few quarters.

    “However, the biggest challenge facing JCY in Malaysia continues to be shortages of its work force which constraints its output. JCY has increasingly implemented automation for its production and this has resulted in the improvement of its output yield recently,” he said.
And here's a look at JCY's earnings performance.

For its FY 2010, JCY recorded profits of 173.763 million. ( I can still remember CIMB giving an estimate of 359 million for JCY's fy 2010!!)

Last night, after its 'earnings turnaround', JCY made only 14.553 million.

Yeah, the EPS is rather so meaningless (if you have to know, it's only 0.71 sen!)

So how shall I put this 14.553 million into perspective?

RHB's research report back in Feb 2011, would be an excellent example. Back then, JCY was trading at 66 sen, RHB gave an extremely bold call, saying JCY should be valued at 22 sen!

See the arrow?

RHB had estimated that JCY earnings for its fy 2011 should be around 44.9 million. Based on an earnings of 44.9 million, JCY's EPS should be 2.2 sen. With an EPS of 2.2 sen, RHB reckoned that JCY should only be worth 22 sen.

Remember, on that Feb day, JCY was trading at 66 sen.

Today. JCY made only 14.553 million for its fy 2011. (RHB estimate was 44.9 million).

JCY is now trading at 76 sen. (Back then JCY was trading at 66 sen)


ps: I don't think RHB has a report out on JCY. What a bummer! I would have loved to see what RHB had to say on JCY's earnings.

ps: SpAM postings would not be published.


tohff7 said...

already ceased coverage back in August

Moolah said...

Ah.. you are correct. Thank's for pointing that out.

RHB ceased coverage and in that report, they gave JCY a fair value of 33 sen.

Their estimate earnings for fy 2011 was 36.7 million. And needless to say, JCY failed to even meet this set of earnings projection.