Our latest channel checks confirmed that WD has booked JCY’s capacity even though WD’s volume will be down significantly. In view of this and higher ASP, we now expect a significant jump in earnings in the coming quarters. FY9/11 results were better than consensus and our loss forecast of RM7.8m, triggering FY12-13 EPS upgrades. This raises our target price from RM0.58 to RM1.14 even though we now value it at 6x CY13 P/E (prev. 8x CY12), closer to comparables. Upgrade from Trading Sell to TRADING BUY.
We have not upgraded the stock to an outright Outperform as we are uncertain about the sustainability of these earnings, especially when JCY’s direct competitors and WD resume normal production.
We have not upgraded the stock to an outright Outperform as we are uncertain about the sustainability of these earnings, especially when JCY’s direct competitors and WD resume normal production.
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