Their medical assembly solution saved their a** again. Penta is the only listed one in Malaysia that makes assembly equipment for medical industry at this scale. I believe if there's a recession in the US, the contraction of medical industry is inevitable, although this industry is well known as an industry that is recession proof. They will reduce the capex to survive through the storm as well, hence it is not looking good for Penta in the short term. However, Penta is very aggressive when comes to seize new opportunities, for example medical, renewable energy and more. Their diversification strategy is the correct strategy to mitigate downturn of one of their core competency. I will continue to invest in Penta (not MY but HK) due to the cheap valuation there.

As an investor, if we focus too much on calculation, we will lose out a bunch of opportunities. Their performance might be bad in the upcoming quarters (it can be 1 - 2 quarters before the growth restarts), but it is worth to invest in this company. I truly believe that in order to outperform the index, retail investor like us have to bet heavily on the best idea that we have.

This is not a buy/sell call post, please consult your legal financial advisor for investment decision.

Besides that, Pentamaster also have a broad range of test solutions for semiconductor/electro-optical division. However, their focus is no longer on providing solutions for consumer electronics but rather automotive, industrial and medical which is very strategic since the semiconductor industry growth is driven by these three sectors. As an investor, I like consumer electronic companies when the economy is good, because many consumers like us have the spare cash to purchase great electronic products.

For their medical division, they are providing automated assembly solutions to medical devices companies. I have no access to who's their customers but I believe companies like Boston Scientific, B braun, Abbott and smith & nephew that have manufacturing facilities in Malaysia is one of Penta customers. Hence, it's essential to see what's their performance to gauge how much capex that they are allocating to purchase equipment for better manufacturing efficiency. I believe since they are doing pretty well, hence Penta will also do very well. Keep in mind that this is a recession proof industry.
Besides that, Pentamaster MediQ is also making effort to produce one time use product that can be used in the medical industry. I don't anticipate an astronomical growth since it is still a startup company, but I hope that they can contribute some to the top and bottom line in the future. I believe we can refer to how the market values Umedic to gauge how lucrative is this industry in Malaysia.

Short term pain, long term gain.
Penta has two listed entities, one in bursa and another one in HKEX.
HKEX Penta is dirt cheap, while Penta Bursa is dipping non stop.
Based on my experience, usually stock price will correct itself to a reasonable level before the QR release. For companies like Penta, I am not surprised if the market makers already know what's the Q2 FY2024 revenue/profit before the official release. My instinct tells me that the upcoming QR release is not as good as the market anticipates. This can be attributed by global automotive weakness amidst of oversupply of EV especially in China. However, we all know that the upcoming 720k sqr feet campus located at Batu Kawan is the next big thing for Pentamaster. They already mentioned since year 2020 that their new campus is to cater for medical division.

We can find a few companies that are operating in the same sector as Pentamaster for comparison. For their automotive SiC burn in test solution, AEHR test system is the best peer to peer comparison that we can find. For those who doesn't know what burn in does, it essentially is an extreme process to test how durable is the silicon (chip). The equipment will drive high voltage & current or increase the temperature to an extreme level to test whether the chip can sustain. It is a very important process for automotive chips since they must be very reliable to avoid accident occurs due to semiconductor malfunction.

@James??

Ermm, @James?
No more reply from you?
To be honest I miss you so much, unveil your lies is my responsibility.
I have to protect the newbies from guys like you.

Here's the article! Please read 5x before you short any stock!

https://www.seagate.com/as/en/blog/why-hdds-dominate-hyperscale-cloud-architecture/#:~:text=HDDs%20represent%20the%20predominant%20storage,to%20market%20intelligence%20firm%20IDC.

Can you tell me what is the most dominant storage device that is used in the data center at this moment?
Is it SSD or HDD?

Can you let us know why Dufu is suddenly a HDD manufacturer?
Do you know what Dufu does?

Time to do some researches dude! Think twice before shorting a stock!

Please short MPI, the PE ratio is 166+. Short it and show to us how much is your loss (confirm no gain at all)!

I doubt that you won't, because you're a loser. Come share with us what's the proper valuation of dufu, and I believe the market will slap your face as hard as possible. When a business is at its upcycle, nobody will care about what's the PE ratio and etc. You know why? Because the business is getting better and better each and every single day! You can't put a metric to measure how much will it be earning!

Dude, you should donate your money instead of shorting dufu. Kindly share to us how much you've lost and how freaking panic you were when the price shoot to 2.3+ just now.

No need to appreciate this guy. I think he will never find a multibagger using his current mindset. @James is trying to outsmart the market by shorting a stock with bright outlook. One word to describe this fella, ST*PID.

I wonder why there are so many trollers on i3.
So toxic :)

I believe you're the smartest and the kindest investor out there.
All the newbies owe you a trophy.
When they sleep at night, they will think of you, James Bond. A handsome young man with small taufu balls appear in their dream, asking them to run from buying Dufu shares.
But in reality is @James_Bond a handsome guy?
I believe in inner beauties, even if he looks like a fatty with bouncy belly.
I believe we should draft a song for you, the title should be "The Kindest Investor --@James_bond".
Salute sir, you're the best!

Thanks for protecting us dude. You're the best.

Good luck @James_Bond, I know you're the best in the market.
I believe you're so smart, but there's no need to show people what's inside your brain here.
The QR is bad, and it's expected.
The 5% dropped today is to justify the bad QR. Believe or not, it's already priced in.
It makes sense also if it continues to drop tomorrow. I'm not a prophet, nor a god who knows what will happen tomorrow, or even in the near future.
But I do know the long term prospect of this company, it's going to do very well in the future.
All the best dude, you should spend more time to trade rather than talking co*k here.

Dude, stop embarrassing yourself. Market knows the upcoming QR will not have any significant improve. It was mentioned in the previous QR report. Use your brain to read, tq.

Market is a forward looking machine. Don't use ur trader mindset to judge any stock, tq.

https://blocksandfiles.com/2024/05/01/seagate-is-flash-killing-the-hard-drive-no/

Of course competitive in the AI era. HDD will still be the primary source for cold storage, and the content can be either texts or videos. Demand for high capacity HDD will soar once we start to use AI to generate contents. This is a multiple years of investment for me, and I have the same opinion as the CEO of Seagate, that this recovery is only the early stage, we are still far from the top.

https://www.trendforce.com/news/2024/04/22/news-ai-boosts-demand-for-high-capacity-hdds-as-seagate-expected-to-follow-with-price-increases/

Tonight seagate earnings call. I expect a very bullish recovery in the next quarter.

But it really depends on which part of the componeny a company is making for HDD business, the capacity is trending higher and higher thus the amount of HDD required is going down.

Lol, that's why I said hopefully although not really possible. They have metal stamping division as well, and they serve more than one industry other than semiconductor.
Yes, newbie8080, you're right. HDD TCO is lower than SSD in the data centre, that's why almost all the hyperscaler are still using high capacity nearline HDD as their primary memory storage device.

Hopefully dufu can secure AI server contracts like PIE did. Although it's not that possible...

The new shareholders are here to make money. When the share price plunges to RM1, APB will suffer 50% paper lost.

Good luck with your valuation trick.

Nevertheless, all the OSAT companies in Malaysia will benefit gao gao from this China-US tech war. More and more companies will approach our local players for order diversifying and eventually making our local champions to become more prosperous. I guess this is the new theme with almost no downside but huge upside that a contrarian investors can safely bet on. Remember, human will perform the best when they are in pressure.

They have mentioned multiple times in their quarterly report that they are engaging with new customers to get new orders. I trust what they said because most of the penang tech companies are very accountable and honest. Gtronic is trying hard to position themselves to benefit from the upcoming semiconductor uptrend. The only downside that I can see now is the new management. We need time to understand what's their thinking and whether or not they can be trusted to turnaround the business.

Gtronic is serving mostly consumer electronics components. I guess that's why the current new CEO is trying hard to engage with more customers to divert from consumer to industrial usage semiconductors. You can clearly see that Gtronic focuses more on niche product in order to enjoy the high margin.
Their capex has been sluggish since FY2019 until FY2022. In these years, their capex is ranging from 10-20million only. This is something that I don't like, they are not trying hard to put shareholders money into expanding the business. However, the capex upcycle has been resumed since FY2023, with 30 million which I think it's a good sign of new orders incoming. In FY2024, the CEO told the analyst that they are going to do 50 million in capex, which is something that I like. The new CEO is finally utilizing their cash flow to do something other than giving back all the money to the shareholders.

Next week shoot to the moon.

https://www.trendforce.com/news/2024/04/09/news-western-digital-customer-letter-confirms-hdd-supply-shortage-nand-flash-and-hard-drive-prices-continue-to-rise/#:~:text=The%20demand%20for%20large%2Dcapacity,for%20both%20HDD%20and%20SSD.

Actually this memory industry upcycle is predicted since Q3'23. Nothing is so special since everyone in the market already acknowledge the trend.
For instance, you may refer to NAND/HDD suppliers like WDC, STX, and Micron share prices.

The market is inefficient, and our job is to discover the inefficiencies and make money from them.

Memory semiconductor industry is a very tough industry.
Oversupply will cause the memory semiconductors suppliers like Samsung, SK Hynix, Micron and etc to cut price in order to clear the inventories. They will start to layoff employees and reduce the output of the production in order to survive the downcycle. The good news is, once the inventory level in the industry is back to normal, the suppliers will start to increase the price of the products. Hence, their margin will slowly back to "normal".

WDC and STX are clearing their inventories, and it will take some time.
I believe if what WDC said the conference is true which the demand is actually recovering, then it is going to take 2-3 quarters until they start to order from their subcomponent suppliers.

Joe Moore

Yes. Okay. I mean that idea that on the hard drive side, your focus isn't on supply growth. Like what if demand comes back? I mean, it seems like it could be a very good backdrop for drives in the sense of what's your ability to respond to a pickup in demand. And because it's such a complicated supply chain with so many parts, and it's been bad for so long, frankly, that I would think some of your subcomponent suppliers have limited flexibility as well.

David Goeckeler

Yes. Well, remember that in the drive business, even you're coming back to more exabytes, but units, it's still going down, right? So we've sized the business for what we think the number of units we need going forward that will keep the market balanced and that's where we want to stay because every quarter you go forward, the mix moves forward to higher capacity drives, you're adding exabytes through more capacity per unit. But I think the drive business has been persistently oversupplied for what, maybe 15 years, 20 years.

I mean everybody talks about the Thailand flood, it's like more, I mean it's like the only time where we had supplied more demand than supply in the drive business was when we had a flood in Thailand. And I was just there like 3 weeks ago, and they still have the thing on the wall that tells you how high the water went, but I don't think the drive industry should be any different than any other industry in the data center, right? You can't just show up in the quarter, you need something and you get it. And that's the way the business has been run for a very long time because of this persistent oversupply.

And I talked about earlier, we've now the downturn was a brutal downturn it had impact on quite frankly, a lot of people's families that work in those places that we are underemployed. And so we want to set the supply at a certain level. And then when we get visibility and conviction on sustained demand, not demand that just shows up for 1 quarter or 2 quarters or 3 quarters. I mean sustained demand for a long time, then we can start talking about if we put supply back in the system. But we're -- we're not at that point yet. We'll see how quickly we get there. I do think we're -- I do think in the next several quarters, we'll get back to supply-demand balance drive industry for maybe the first time in a long time.

Joe Moore

Yes. Okay. That makes sense. And then you guide one quarter at a time, which I appreciate, but any sense on the durability of the good things that you're seeing beyond the current quarter?

David Goeckeler

Well, if I look at the drive business, we're getting -- we're coming back. We did a lot of work during the downturn where we just structurally remove capacity from the system. So I think the drive industry is an industry that has been going through this client to cloud transition for literally 15 years. And the client business, there's just a lot more unit capacity that in the system that is required in a nearline dominated business. So we've just removed that from the system, I think we've signaled that to our customers. We don't have as much capacity as we had in the past. And in return, they're giving us more visibility into what their ordering looks like throughout the rest of the year. So in the drive business, we came into the fiscal year believing we're going to see sequential growth throughout the fiscal year, certainly, in the first half of the year, first 3 quarters of the year, we're seeing that.

And last earnings call, we extended that to this calendar year. So we feel good about that business in a return to kind of reversion to the mean of the 20%, 20% to 25% through cycle exabyte growth we're getting back to that.

Question: Okay. And I'll come back to some of that, but maybe just on the quarter being better, similar on the hard drive side, where are you seeing that gross margin improvement? Is that all price? Or is there other cost element.

Answer: The hard drive business is driven by both better pricing and higher shipments. So we're still in an underutilized state. We expect to be -- still have some utilization this quarter, but we're seeing a little better volume. And of course, when you're -- we have underutilization, we're going to see a margin impact of that. But we're seeing better volume and better pricing in the drive business. And as I think if you roll both of these forward into Q4, we're going to see again, in Q4, we're going to -- our F Q4, which is our June quarter. Again, on the flash business, you're going to see bits flat so we'll see some modest pricing driven improvement there. And then we'll see some modest growth in exabytes and pricing in the drive business. So I would expect some modest sequential growth going into F Q4. Yes. But we're also -- I want to balance it with one thing, we're going to see more variable comp headwinds in outperformance of the business in Q4.

https://seekingalpha.com/article/4676136-western-digital-corporation-wdc-morgan-stanley-technology-media-and-telecom-conference

And then in the HDD business, of course, we saw the big hyperscale players in the U.S. coming back more robust conversations there. We saw good growth in China. We had over 100% sequential growth in China in the HDD business. So we came into the quarter with a lot of strength and a lot of momentum in the business. which brings us to the current quarter. I'll give a little bit of an update on what the environment looks like right now.

I think from when we guided, the business is stronger than that at this point. If we look at the guidance ranges, we provided, we expect to be near the high end of guidance of the range we provided. But each business is performing better from a profitability point of view. Couple of points of additional gross margin in each business. All the rest of the numbers are within guidance ranges. So we expect this quarter, we expect on an EPS basis to exceed the high end of our guidance range.

https://seekingalpha.com/article/4676136-western-digital-corporation-wdc-morgan-stanley-technology-media-and-telecom-conference

And then in the HDD business, of course, we saw the big hyperscale players in the U.S. coming back more robust conversations there. We saw good growth in China. We had over 100% sequential growth in China in the HDD business. So we came into the quarter with a lot of strength and a lot of momentum in the business. which brings us to the current quarter. I'll give a little bit of an update on what the environment looks like right now.

I think from when we guided, the business is stronger than that at this point. If we look at the guidance ranges, we provided, we expect to be near the high end of guidance of the range we provided. But each business is performing better from a profitability point of view. Couple of points of additional gross margin in each business. All the rest of the numbers are within guidance ranges. So we expect this quarter, we expect on an EPS basis to exceed the high end of our guidance range.

https://investors.seagate.com/events/default.aspx

Let's join together and listen to STX's update on their core HDD business.

What is going on? Why not yet publish the QR?

Dufu has ~40% spacer ring market share. Just take notion HDD segment as a reference, we can anticipate a somehow modest recovery...

Notion HDD segment does base plates, spacers, disk clamp... But dufu is spacer pure play company.

Last Friday sell off was to price in the poor performance of its peers. Dufu is quite unique in the supply chain, its metal stamping division takes semiconductor parts, automotive, life sciences and etc. But its main product is the spacer ring, which I anticipate the recovery has definitely started since January of this year.

Take profit...

Notion just got pumped 44%...

Huge pump after QR revealed. Get in the ship before it sails.

That's a 45% increase in HDD revenue...

Notion HDD revenue rebounded from 16million last quarter to 23million this quarter...

The semiconductor industry is definitely going to revive in this second half of this year. There is no turning back, we all are using more digital devices.

All the local OSAT players are getting more orders from China. Customers are looking for a more resilient supply chain instead of focusing all their resources in China. This will benefit our local OSAT players, as well as equipment and precision metal players.