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Tuesday, April 15, 2014

JCY International back in focus (Star)

CIMB Equities Research said JCY is showing signs of a recovery following the strong earnings recorded in the first quarter of1QFY14 on the back of higher sales and better operational efficiencies.

" We expect stronger HDD demand growth from the enterprise segment, a weaker competitive environment and a potential entry into the tablet market to drive JCY's earnings recovery," it said.

The research house expects its valuation to remain attractive due to a strong earnings recovery over the next two years. It said JCY currently trades at 8.7 times CY15 price-to-earnings (P/E), which is a 30% discount to its peers and a 23% discount to HDD manufacturers and original equipment manufacturers (OEMs).

"Applying a blended multiple method, we get a valuation range of 99 sen to RM1.07 which indicates a decent 31%-42% upside. Our stance on the stock is mainly trading-oriented," it said.

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