Technology (OSK)

UNDERWEIGHT. All in, we reiterate our UNDERWEIGHT recommendation on the sector as the floods have gotten worse, with the core production facilities of most HDD component manufacturers now under water as the monsoon rain has yet to show signs of subsiding. As for the stocks under our coverage, JCY remains a SELL at RM0.31 while Eng Teknologi has been cut to a SELL at a revised Fair Value of RM1.45 (See accompanying report on Engtek’s Privatisation Offer dated 17 October 2011). We also take the opportunity to downgrade our call on Notion to a SELL at a revised Fair Value of RM1.43, based on 5x FY12 PER (previously 6x PER).