JCY- top-line & bottom-line maintained

Results Update

JCY has announced its results for QE31/3/2012. Its net profit increased 12 folds to RM163 million from a year ago but was unchanged when compared to its immediate preceding quarter (QE31/12/2011). Revenue was similarly up 45% y-o-y or 3% q-o-q to RM577 million. JCY is still benefiting from strong demand from HDD as it is one of the few manufacturers which was not hit by the flood in Thailand in late 2011. However, the stagnant top-line, bottom-line & profit margin are all signs that an equilibrium has been achieved where JCY could not increase its production output further and/or the market demand is beginning to be fulfilled. If so, the super profit of the past two quarters should start to ease back in the quarters ahead.


Table: JCY's last 8 quarterly results


Chart 1: JCY's last 14 quarterly results

Valuation

JCY (closed at RM1.57 yesterday) is trading at a PE of 10 times (based on last 4 quarters' EPS of 15.65 sen). However, if we assumed that JCY's earning has peaked and will ease back in the near future, then JCY's forward PE would likely to be higher than this. As such, I believe JCY is now fully valued.


Technical Outlook

JCY is in an intermediate uptrend line. Its immediate resistance & support is at the horizontal line at RM1.60 & RM1.40, respectively.


Chart 2: JCY's daily chart as at May 17, 2012 (Source: Quickcharts)

Conclusion

Based on the above, I would rate JCY as a SELL INTO STRENGTH.