Wednesday, November 21, 2012

JCY broke above its strong horizontal line RM0.82

In August, when I've updated readers on the latest results for JCY (for QE30/6/2012), I opined that JCY had crossed the tipping point and we should sell into strength. The subsequent drop in JCY share prices was nothing short of spectacular- from RM1.40-1.50 to a low of RM0.65-0.70.

Since the beginning of November, JCY has risen steadily and yesterday, the stock has broken above its horizontal resistance at RM0.81-0.82. Technical speaking, the stock could be poised for further recovery, especially if the results for QE30/9/2012 shows the company was able to slow the sharp decline in its bottom-line. Readers may recall that in QE30/6/2012, JCY's net profit dropped 35.5% q-o-q to RM105 million while revenue was unchanged at RM573 million. The sharp drop in the net profit was attributed to profit margin erosion, from about 28% in QE31/3/2012 to 18% in QE30/6/2012, as the favorable operation for HDDs- a product of the great Thailand flood of 2011- began to reset. Would JCY be able to command a net profit margin of 18% for QE30/9/2012 as other producers' plants return to operation? I have my doubts but we will have to wait & see. From the chart, we can see that JCY's technical outlook has turned bullish. Its immediate support would be the horizontal line at RM0.81-0.82 while its next resistance is the horizontal line at RM1.00.

Chart: JCY's daily chart as at Nov 21, 2012_9.15am (Source: Quickcharts)

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, JCY.

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