Tuesday, March 09, 2010

Eng & Dufu- the cheaper HDD players

There are a few companies involved in the production HDD components. The biggest company is the recently-listed JCY International Bhd ('JCY'). The next biggest player could be Eng Teknologi Holdings Bhd ('Eng'). Other players include Dufu Technology Bhd ('Dufu') and Notion VTEC Bhd ('Notion') — both produce components for HDD, while the latter also makes components for single-lens reflex (SLR) cameras. For more on technology stocks, go here.

Based on Table 1 below, we can see that Eng is trading at a lower PER than JCY. Between the 2 smaller players, Dufu trades at a lower PER multiple than Notion.


Note: Closing prices as at Mar 9, 2010.
Table: HDD players' results for QE31/12/2009 & QE31/12/2008

The financial position of Eng & Dufu are fairly satisfactory. As at 31/12/2009, Dufu's current ratio & total debts to shareholders' funds stood at 1.9 times & 0.34 time, respectively. At the same time, Eng's current ratio & total debts to shareholders' funds stood at 1.9 times & 0.29 time, respectively. The attractive valuation may explain why Eng has risen sharply for the past one year, from a low of RM0.50 to the present price of about RM2.40. Dufu's price run-up has been a subdued affair, rising from a low of RM0.30 in early 2009 to the present price of RM0.55. Based on the above, I believe Eng & Dufu could continue to see buying support & higher prices ahead.


Chart 1: Eng's monthly chart as at Mar 1, 2010 (Source: Tradesignum)


Chart 2: Notion's weekly chart as at Mar 8, 2010 (Source: Tradesignum)


Chart 3: Dufu's weekly chart as at Mar 8, 2010 (Source: Tradesignum)
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4 comments:

  1. LaymanWednesday, March 10, 2010 11:10:00 AM

    Dear Alex,

    Thank you for your analysis. I got your point. Good day.

    ReplyDelete
  2. LaymanWednesday, March 10, 2010 11:58:00 AM

    Dear Alex,

    Sorry to trouble you again. Hope to hear from you about KNM and KPJ. I am stucked with few lots of KNM (Bought around 0.75-1.00.).Any potential value to hold any longer? Cant decide on KPJ. Thanks.

    ReplyDelete
  3. MaxWealth88Wednesday, March 10, 2010 4:17:00 PM

    eng and dufu .. really fly today!! seems like tech stocks are in play now after a long slumber.

    knm ... seems like market is not buying into the GO story. jz my observation ..

    cheers!

    ReplyDelete
  4. Alex LuThursday, March 11, 2010 8:36:00 AM

    Hi Layman,

    KPJ has gone up from RM0.40 in 2002 to RM2.80 in Jan 2010. These prices were adjusted for the recent corporate exercise of 1-to-2 share split, followed by a bonus of 1-for-4. The basic full-year EPS is now about 19 sen and KPJ (closed at RM2.62 yesterday) is now trading at a PER of 14 times. It is possible that it may trade up to a PER of 15-18 times due to its steady growth. If so, KPJ may still go up by 10-30% from here.

    KNM had a similar strong run-up, rising from less than RM0.10 in 2003 to a high of RM2.50 in 2007. Ever since it paid RM1.7bil (350 million-euro) to acquire Borsig, the Germany-based process equipment maker in 2008, KNM has been under the cloud. Investors have turned skittish on this group over the high price paid for Borsig & subsequent costly financing packaging. Even its recent announcement of a 'MBO' was poorly received. However, it is good to note that EPF is buying into KNM. EPF is a shrewd fund manager, known to have a good nose for a good deal. Maybe you can join in & piggy ride on their investment in KNM.

    ReplyDelete