JCY  posted  9MFY13  core  loss  of  MYR71.7m  (-117%  y-o-y),  beating  our estimates but in line with consensus. No dividend was declared. All in, we bump up our FY13-15 forecasts by 30-120% to factor in weaker MYR and lower opex assumptions. As we see another lacklustre year ahead, we  maintain  our  SELL  call  on  JCY,  with  a  new  FV  of  MYR0.45  (from MYR0.42), pegged to an unchanged 0.9x CY14 P/NTA. 
 
- Above  expectations.  Although  JCY  remained  in  the  red  for  the  third consecutive quarter, its core loss had narrowed to MYR5.4m in 3QFY13 (-84%  q-o-q),  thanks  to  higher  shipment  volume  and  better  operational efficiency. However, on a y-o-y basis, core earnings plummeted by 105% y-o-y,  due  to:  i)  a  decline  in  volume  shipped,  ii)  lower  average  selling prices (ASP), iii) tighter quality requirements from customers, and iv) the implementation of the minimum wage policy early this year. Overall, JCY posted  9MFY13  core  loss  of  MYR71.7m  (-117%  y-o-y),  beating  our estimates  as  we  had  been  overly  aggressive  on  our  opex  assumption. No dividend was declared for the quarter.

- Outlook.  Industry  leaders  Western  Digital  and  Seagate  have  guided 3QCY13 worldwide hard disk drive (HDD) shipments to grow by 2-6% q-o-q  to  135-140m  units  on  the  back  of  a  seasonal  uptick  in  gaming  and branded products.

- Forecasts  and  investment  risks.  We  raise  our  FY13-15  bottomline forecasts  by  32%,  38%  and  116%  respectively,  after  incorporating weaker  MYR  vs.  USD  for  CY13/CY14  to  MYR3.09/MYR3.10  (from MYR3.00/MYR3.05)  along  with  lower  opex  assumptions.  Risks  to  our forecast  include:  i)  a  rapid  recovery  in  the  PC  market,  ii)  a  further weakening of the MYR, and iii) better cost efficiency.

- Maintain  SELL.  Pegging  the stock  to  an  unchanged  0.9x  CY14  P/NTA (representing -1σ from the domestic sector mean), we derive a new FV of MYR0.45 (from MYR0.42). All in, we retain our SELL call on the stock as  we  see  another  lacklustre  year  ahead.  We  think  JCY,  being  a  pure HDD components maker, is exposed to product concentration risk, unlike Notion (NEUTRAL, FV: MYR0.74) which has a diversified product base.

Source: RHB