Journey to Wealth
JCY International - FY12 results meet expectations
Period 4Q12/FY12
Actual vs. Expectations The group's FY12 revenue and net profit came in within our full year estimates at 101% and 97% of the numbers respectively.
Dividends A single-tier interim dividend of 3.0 sen has been declared on 16 August and paid on 10 October. All in all, a total net DPS of 8 sen was declared and paid, implying a dividend payout of 37% in FY12.
Key Result Highlights YoY, FY12 revenue soared by 34.3% on the back of a better ASP and higher volumes shipped, thanks to the shortages in HDD mechanical components post the Thai's flooding. Coupled with an effective products mix and efficient cost management, the EBIT margin improved by leaps and bounds to 19.9% (from just 1.1% in FY11).
QoQ, the 4Q12 revenue declined by 6.4% due to lower volume shipped in light of the normalised shipment of orders in the quarter after the initial high pent-up demand just after the Thai flood. Together with the higher operating costs and exchange losses incurred, the net profit fell heavily by more than 90%.
Outlook The management guided that while it is sanguine on the long-term HDD outlook, the ongoing global economic uncertainties still pose a risk of dampening the demand momentum in the short term.
They also foresees that the future earnings may be dragged down by pressures forcing a reduction in the ASP (average selling price), a slower growth of Total Addressable Market, adverse currency fluctuations and also labour costs increments.
Change to Forecasts We are maintaining our FY13 earnings forecasts of RM303m (which is lower than consensus estimate of RM361m) at this juncture, as we have factored in the above bearish risks in our forecasts earlier.
Rating Maintain MARKET PERFORM
Valuation We are maintaining our target price at RM0.85 based on an unchanged targeted FY13 P/BV of 1.15x, which is close to the -1SD level below the mean of 1.1x.
Risks Foreign currency exchange rate.
Industry recovery may falter halfway.
Lower orders from HDD customers.
Source: Kenanga
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