Tuesday, August 03, 2010

HDD sector takes a hard knock

The second thing that I have learned from the Edge this week is the impact of Apple's iPad on HDD sector. Like many, I was quite surprised by the sharp fall in the share price of JCY & Notion. Now, we learned that iPad tablet computer from Apple has caused a sharp dent in the sale of netbooks, which use hard disk drives (HDD). On the other hand, iPad does not use HDD but uses flash memory. The impact was so severe that Seagate & Western Digital have cautioned investors that they faced pricing pressure as HDD manufacturers increased production.

From Chart 1, we can see that JCY broke below its horizontal support at RM1.41 on July 23 & took a sharp dive to a low of RM1.23 yesterday.


Chart 1: JCY's daily chart as at Aug 3, 2010 (Source: Quickcharts)

Notion's selldown continued. It broke the horizontal support of RM2.25 today. Its next strong horizontal support is at RM1.85.


Chart 2: Notion's daily chart as at Aug 3, 2010 (Source: Quickcharts)

Due to this game-changing event, the HDD sector may take some time to sort itself out. It would be prudent not to take an aggressive position in any of the HDD players until the dust has fully settled.
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17 comments:

  1. ronnieWednesday, August 04, 2010 8:25:00 AM

    Dear Alex. The business of sub contracting in HDD components is very competitive. Margins are razor thin. Customers know exactly how much profit these sub contractors earn. It is unlikely that these customers will leave anything on the table for these sub contractors. Dumb analysts are waking up to this fact. Too late as many investors have been suckered into buying the shares.

    ReplyDelete
  2. ronnieWednesday, August 04, 2010 8:25:00 AM

    Dear Alex. The business of sub contracting in HDD components is very competitive. Margins are razor thin. Customers know exactly how much profit these sub contractors earn. It is unlikely that these customers will leave anything on the table for these sub contractors. Dumb analysts are waking up to this fact. Too late as many investors have been suckered into buying the shares.

    ReplyDelete
  3. AnonymousWednesday, August 04, 2010 8:52:00 AM

    This comment has been removed by the author.

    ReplyDelete
  4. AnonymousWednesday, August 04, 2010 8:53:00 AM

    hi alex. please comment on ANNJOO which its Q2 results just release yesterday. Thx

    ReplyDelete
  5. 建邱勳Wednesday, August 04, 2010 11:05:00 AM

    This comment has been removed by a blog administrator.

    ReplyDelete
  6. Alex LuWednesday, August 04, 2010 12:24:00 PM

    Hi wong

    For 2Q2010, ANNJOO's net profit soared when compared to the low base in 2Q2009. A more meaningful comparison is with 1Q2010 where its net profit increased by 71% q-o-q on the back of a 26%-increase in turnover. From either angle, ANNJOO's performance is outstanding.

    This morning, the share broke above its medium-term downtrend line at RM2.58-2.60. Its next resistance is at RM3.00 & then RM3.30.

    I think ANNJOO is continuing on its prior uptrend. This makes the stock a BUY.

    ReplyDelete
  7. Alex LuWednesday, August 04, 2010 12:25:00 PM

    Hi ronnie

    Thanks for sharing.

    ReplyDelete
  8. steveWednesday, August 04, 2010 12:47:00 PM

    Dear Alex,
    May I know what's your comments on MBSB at current price? Thanks!

    ReplyDelete
  9. UnknownWednesday, August 04, 2010 1:14:00 PM

    Hi Alex,

    Can you give your opinions on BJCORP?

    I have some on 1.09 which i presume the price had been bottom and stable. But, lookng at the performance these few days, i think the selling pressure still exist without the support from big players.

    Can u pls give your opinions regarging this counter?

    Thanks

    ReplyDelete
  10. @h TongWednesday, August 04, 2010 4:59:00 PM

    Hi Alex,

    Any comment on JCY, is this share price hit bottom?

    Thanks

    ReplyDelete
  11. UnknownThursday, August 05, 2010 1:21:00 AM

    Dear Alex,

    Please comment on Haio?

    10q

    ReplyDelete
  12. Alex LuThursday, August 05, 2010 8:43:00 AM

    Hi steve

    MBSB reported a very good set of numbers for QE31/3/2010. Its net profit jumped to RM43 million on turnover of RM279 million. It attributed the good results to better performance from the personal financing activities which led to better Islamic banking income.

    Chartwise, I think MBSB may test its 2007-2008 high of RM1.70. Whether it can break through that level will depend on the results for QE30/6/2010 which should come out later this month.

    ReplyDelete
  13. Alex LuThursday, August 05, 2010 11:36:00 AM

    Hi Bryan

    BJCORP rose from a low of RM0.12 in 2006 to a high of nearly RM2.00 this year. The current downtrend (a medium-term downtrend) is very sharp & it has even triggered a death cross a few days ago. However, BJCORP is now at its long-term uptrend line, with support at RM1.00. From this point, it may stage a rebound towards its 50-day SMA line at RM1.20-1.25. We don't know where it will go from here. We can't ignore the death cross and yet we can't disregard the long-term uptrend line support of RM1.00. We will have to wait & see how the play unfold. I only wish that I had convinced more of my clients to buy this stock in 2006 (see the link below).

    http://nexttrade.blogspot.com/2006/12/bjcorp-whats-up.html

    ReplyDelete
  14. Alex LuThursday, August 05, 2010 11:40:00 AM

    Hi @h Tong

    JCY may have found a temporary bottom after it broke above its short-term downtrend line at RM1.26. Let's see whether it can form a base at this level before buying into the stock.

    ReplyDelete
  15. Alex LuThursday, August 05, 2010 11:55:00 AM

    Hi jonker

    Haio's technical outlook is bearish, It broke below its 200-day SMA line at RM3.60. It may see a death cross soon. The immediate support is at RM3.40-50 and thereafter at RM3.15 & RM2.50.

    Haio's recent poor financial performance did not help the stock. If its performance improved, the stock will stand a better prospect of a turnaround.

    ReplyDelete
  16. AvatarThursday, August 05, 2010 5:14:00 PM

    Hi Alex,

    Good comments on HDD and flash memory. I agree and nowadays more computers especially mobile ones are using SSD too since its price is getting cheaper. Can Notion or JCY manufacture these?

    ReplyDelete
  17. UnknownWednesday, September 01, 2010 11:11:00 AM

    can you re-look into jcy and comment pls?
    thanks.

    ReplyDelete