RJ87 the simple answer is to study the business. The elaborate answer is as follows.

How the market values a company (Stock Price) is both determined by the current worth of the company and how much people believe the company is worth. For a company like DUFU and the fact that they are in the Technology industry, the amount I believe the company is worth in the future is dependent on how much capital investment they put back into the company to take advantage of new technology.

To illustrate my point look at DUFU's financial statements I've shown below. The first table is how much money they put in investing in new plants and equipment for the year and the second line is the companies profit for the year. Check out the year 2011 and 2012. Look at how much money DUFU put in capital investment to keep their technology up to speed.

Capital Investment Net Profit
2006 RM8,366,083.00 RM7,861,756.00
2007 RM13,381,615.00 RM12,152,951.00
2008 RM7,924,276.00 RM978,473.00
2009 RM3,634,477.00 RM11,125,096.00
2010 RM7,942,748.00 RM4,017,702.00
2011 RM22,869,525.00 -RM2,773,862.00
2012 RM11,277,289.00 -RM3,279,272.00
2013 RM3,451,239.00 -RM2,346,350.00
2014 RM7,413,447.00 RM8,268,524.00
2015 RM5,001,450.00 RM18,973,943.00
2016 RM3,178,787.00 RM24,279,943.00
2017 RM5,267,440.00 RM21,779,044.00

The first Helio drives was released in 2012.
https://en.wikipedia.org/wiki/History_of_hard_disk_drives scroll down to the history year by year section.

If you understand how business run things you can see that DUFU was spending a lot of money to gear their manufacturing for new products in 2011 which is then released in 2012 in the form of a new HDD drive technology. Then within 2 years of the new HDD drive launch their profits starts to skyrocket. Until now when the new Helio HDD drive is now the big on demand item in the market so much so that all the HDD makers WD to Seagate just cannot meet demand.

Compare this with the other HDD makers in the market on their financial statements for the same year and you will see they don't spend as much capital investment as DUFU did. DUFU invested in the future and they are reaping the rewards currently.

Which goes back to the question how would I know if DUFU is trading above their worth.

It all depends on how I see their future. Currently DUFU is riding high on new in demand tech but that is fleeting and good for a few years. Eventually they will achieve market saturation of the new tech, Then I look and see if they are investing their capital wisely to take advantage of new technology for their future.

If not I wait until I think I see market saturation for Helio HDD. When I see signs of market saturation I exit because then their revenue would have stopped growing by then. If however I see they put a lot of their profits into capital investment then I go to their Annual AGM to ask them what they are investing in to determine if their new investment has future potential.

Now this takes care of my long term exit price for DUFU.

The short term one is if they hit something like 20 - 25 P/E then I'll seriously consider exiting for the short term until the P/E goes back to a lower amount.

However this depends on whether I determine if there is market saturation or not. If not I buy back if yes then I have to look if they reinvest their capital and the capital investment is good or not. If it is good even if I think the P/E is higher than the price I sold it at I would consider buying back into DUFU.

Good question. Unfortunately I'm away from my pc atm and is posting from my phone so I cannot provide a detail answer. I'll give one later tonight when I get home.

RJ87, plroo7 here is the link to their website if you want to check out their services. http://klsenew.klsetracker.com.my/

I found their courses to be useful despite my years of experience.

RJ87 to expand on my earlier explanation. Before I used equities tracker tools I usually look into industries especially those that are on a downturn. You see them all the time on newspaper, Steel industry facing downturn, Property market downturn, Oil downturn etc etc etc.

I look at all the companies in the industry and this is where things get a little bit tough to quantify and explain for me. I usually look at those companies linked to the downturn industry.

Lets take oil for instance. Everyone would look at oil companies but I would look deeper into companies that are on industries with one or two degrees of separation from the oil industry. For instance plastics. Since Oil prices are down then plastic prices would go down also. Which means companies that sell plastic manufactured products all things being equal would have sudden jumps in profits since plastic prices would go down due to oil prices going down.

This is what got me into BP plastic. Note the date where I said I owned a lot of BP Plastic is around 2014 - 2016 the same time oil prices started their massive downturn. Plastic manufacturing companies like BP plastic experienced high profits due to their raw material costs going down. This my overall style of investment. I look for the businesses and their interrelations to each other first and then I look for the under valued ones.

pang72 unfortunately I have a habit of being too concise and sometimes I fail to take into account who I am talking to. I never said you were a shark, I said you LARPed at being a shark, meaning your a wannabe.

It's like the Cosplayers who dress up like Navy Seals or WW2 Cosplayers who dress like SS Nazi. They want to pretend their BADASS so they try to dress up like the badasses they see in movies and pop culture. However they are not true Navy Seals or SS Nazi because they have never had to do the hard work that comes with the wearing those uniforms. They just want the respect that comes with wearing the uniform. But don't do the work.

Just like good Market Sharks have done their legitimate research before they manipulate a counter's price. How do I know your a LARPer, because you said "DECADES" a good shark will know DUFU has barely been in the market for 11 years and would never have said such a thing in their attempts to fool people.

RJ87 currently I use Equities Tracker and their membership services to look for under valued counter. They have a nice setup which lets you check counters that is at 52 week low that has good fundamentals like if they've paid dividends 10 years straight. However it is a paid service and not cheap.

In the past I look for industries that is in downturn and start my research from there.

Since Dufu only listed in Bursa in 2007 I doubt decades is the best description to use about your MAGIC MARKET POWERS.

Frankly I do hope you stop pushing because I'm trying to use DUFU as teaching opportunity for value investors in Malaysia. By showing how you can research to understand the value of the company. Where to you do your search for the data etc etc.

If you had given me a legitimate question or research backed point to talk about. I would have listened and replied civilly as I had with Investor 9999. However all I'm reading is a guy trying to LARP as a market shark.

First we get "stadium burning guy" and now "don't shy don't shy please sell me lah guy" your all coming out of the woodworks. Almost makes me regret posting my analysis.

But remember WD isn't DUFU only customer there is also Seagate and you can check their QR too

Check out WD quarterly and annual reports. They have a section listing how many units of each type of HD they've sold. Helio drives fall in the Enterprise Drive market.

RJ87 I am genuinely sorry. Your one of the few people who is able to go do their own further research with the data I've provided. That's a rare thing in my experience.

And these numbers are low end assumptions. Also there is other component they are selling on top of the Helio Component sales and you can see why big investors see money for the new few quarters.

There is one other major scenario I would also keep an eye out for. You have to look at DUFU's competitors to see if they finally got into the Helio Drive market. When that happens then DUFU's profits could take a drop as they and the other HDD component makers drive down their prices to get the contract bid.

As for wondering why DUFU 1 dollar isn't Penta's 1 dollar profit is due to the industry they are in. Til very recently everybody thought HDD market is going down to SSD until I explained my view points. Then when everybody then compared them to the actual news about the HDD market coming out of the big HDD sellers like Western Digital, Seagate and Toshiba then they all realized that bearing some massive new technology wave on SSD, HDD sales will grow.

I mean for those who don't understand the math that RJ87 is talking about let me explain the big picture.

Studies estimate that 2.5 quintillion bytes of data is being created daily.

https://www.forbes.com/sites/bernardmarr/2018/05/21/how-much-data-do-we-create-every-day-the-mind-blowing-stats-everyone-should-read/#3d7ea65060ba

That is 2.5 million GB of data created everyday globally.

If you use the latest 14TB Helio HDD drive to store this data you will need 179 units of the new 14TB helio drives. That is 65335 units of the new 14TB Helio HDD drives just to keep up with current data growth.

Each of these new HDD 14TB drives estimate price will be USD 500-600. Let's estimate down USD500 x 65335 = USD32,667,500.

So that means companies around the world have to spend an estimate 32million dollars a year just to meet demand. To be realistic you should double or triple those numbers because they need to buy more units on average for future growth and to allow for individual unit failures.

So mark up the 65K units of 14TB HDD to 130K units and DUFU is one of the handful of component makers in the world that can fulfill this demand. 64 million USD sales Manufacturing Costs will be about 50% of those sales value and you have a 32million costs lets say DUFU components in total count for 50% of those companies material cost and you have 16million USD in sales they might be making to the manufacturers globally.

Hi Investor 9999 in reply to your points. Please go to page 16 of the annual report you just copied and check out this paragraph.

And all this is made possible by the continual trend of HDD makers increasing the numbers of disk media to drive up hard
drive capacities using various platform such as “helium filled enclosure” HDD. Thankfully for us, orders from our customers
involved in the HDD industry remain strong as our spacers grew in tandem with the increase in the number of disk media
required in a single HDD. This recent development enforces our belief that mechanical hard drives are here to stay and
we shall continue to invest in capex and time in supportive of our customers’ strategy to develop products that serve the
HDD market which we believe our revenue stream in this segment will continue to grow moderately in the coming years.


Now I would like you to look at all the other HDD component manufacturers in Malaysia like JCY and look through all their annual report from 2016 till today and do a keyword search for "Helium" or even "Heli".

DUFU is the only one in the HDD manufacturers or even HDD component makers in Malaysia that has the word Helium in their financial statement. In fact there is a specific wording in the statement you pasted, "High Capacity HDD" which DUFU talks about. That statement is also lacking in all the other HDD manufacturers financial statements. All the other HDD makers in Malaysia want to be involved in the new "High Capacity HDD" components sales but DUFU is the only one in Malaysia doing actual sales on that area of the HDD market.

It is good you called me to be more precise and I should have said that "DUFU is the only HDD component manufacturer in Malaysia that makes something used with Helium filled drive technology."

But the rest of my points on the cost of SSD and HDD is still reasonably accurate including the cost of SSD not going down due to the price of that raw material.

That's because that research doesn't exist anywhere I had to do it myself and run the numbers on total Silicon and Silicate supply and demand. Those number is on a definite uptrend. Then compare those same raw material demands with Aluminum the main raw material for HDD which is less volatile and much more flat than Silicon.

Though I do believe I made one other inaccurate statement on my second post I should have left SSD out of the power usage equation because SSD is still more power efficient per GB than even Helio HDD's.



For your second statement I did say I bought DUFU in February. The annual report would have included big shareholders of the company from December 2017. I would not be listed at the time the report was written.

To prove that I am a legitimate share investor I'll give you the name of previous companies where I bought large quantities.

Check out BP Plastic Annual Report from the financial year 2013 till 2015 you'll see my name in a couple of those reports. Or if you are able to go back further. Check out the the company MOLAC (Malaysia Online Access) before they got bought over by the Berjaya group in 2007 if I remembered correctly. My name appears on their final 2006 annual report before it happened.

Oh yeah I also forgot Helium filled drives uses 50% less power per TB than other HDD drives and even SSD drives.

https://blog.westerndigital.com/rise-helium-drives/

Combine the lower original cost per GB of buying the disk drives, and the lower power cost and you have companies like Google gobbling up Helium HDD drives the moment they become available. It wouldn't surprise me if companies like Western Digital and Seagate have a back order for Helio Drives.

OK before I can write my analysis and research I have to disclose that I bought over 1 million shares of DUFU in February this year. The reason I did is below.

One thing people keep harping about is how SSD is on the rise while HDD is in the decline. My research says otherwise. Here are some facts.

HDD is cheaper per GB than SSD. The price difference ratio is 5 to 1. People might say that in the future SSD will get cheaper. Maybe but it isn't possible in the next 3-4 years because of one big factor raw material cost.

The raw material used to make SSD is Silicon. However it is also the same raw material that is used to make motherboards, CPU's, smartphone chips, and also Solar panels. What that means in the same raw material that SSD is based on is literally being used by a lot of high growth industry. Since there is a high demand for the raw material for SSD chips the price of the raw material will be high and will not go down. In fact that price of Silicon has steadily been going up and up this year. You can check it out for yourself here.

http://original.metal.com/metals/silicon/prices

So HDD is not going to be downtrend for a few years because while SSD prices stay high companies still need data storage in fact they need a lot of data storage. Research "Big Data" for anybody who wants to understand what I am talking about. With a price ratio of 5 to 1 all the big companies will be buying HDD in large amounts for their data centers.

Now we go into why DUFU is doing great while other HDD manufacturers in Malaysia is not doing so well.

I recommend you all check out Western Digital and Seagate quarterly reports not just their earnings reports but the whole thing and you will realize that a large reason for their Earnings growth in the past year or two is HDD sales but a specific type of HDD sales. It is a new technology of HDD which is called "Helium Filled Hard Disks." Just read up on this tech to understand why HDD drive sales while growing the number of units sold isn't really growing.

Thus Western Digital and Seagate is introducing Helium Filled HDD drives into the market and their storage capacity is big going into the 12TB range. Whats great about the new Helium HDD drive sales is they are just barely fulfilling their current orders of these drives. Their isn't very many for the consumer market. Just go to Low Yat or any Tech Stores in Malaysia and ask if they have High Capacity Helium Filled HDD drives and none of them will have any in stock.

Which brings me to DUFU because if you all read companies annual reports including the management reports you will find that DUFU is the only HDD maker in Malaysia making Helium Filled HDD drives. Hence their earnings have been great compared to other HDD makers in Malaysia.