If you do look at the report details, Q3 results are still commendable:

1. Q3 revenue only slightly less than the preceding quarter by RM3.5mil (merely 0.6%). This imply tat the ASP is still holding up well despite market concerns.

2. Profit of Q3 is dragged down by their Thailand operations owing to "the higher labour costs as a result of change in minimum wage
policy" as well as "higher setting-up costs arising from ramping up of production".

The company is still paying decent interim dividend of 3 sen. Assuming Q4 EPS remains flat at 5 sen, current market price only values JCY at 5.6 times of PE.

I am definitely not lamken. His analysis is much solid and insightful than wat I cut and paste here. The article was extracted from here http://finance.yahoo.com/q?s=STX. Yaa, lamken has been missing for too long.....

Although JCY is not HDD maker, can we draw similarities between Seagate & JCY in term of business prospect?

"Hard drive manufacturer Seagate Technologies recently announced some bad news. Revenue and gross margin missed projections for the quarter ending in June. I think this is just one of several examples, though, where bad news contains good news for the company. Let's take a look.

Missing revenue and gross margin estimates is certainly bad news. But why were these numbers missed?

Steve Luczo, Seagate's chairman and CEO, provided two reasons. First, he said that the company "reduced shipments in response to the industry’s faster-than-expected recovery from their supply chain disruption." Translation: Seagate overestimated its selling advantage after last year's flooding in Thailand.

Seagate wasn't as badly impacted as chief rival Western Digital during the 2011 floods in Thailand. As a result, the company was able to sell more of its products for a while. That window of opportunity looks to be closed now. This seems to be the ending of unexpected good news for Seagate rather than overtly bad news.

The second reason given by Luczo for the missed numbers was that Seagate "experienced an isolated supplier quality issue" that impacted enterprise product shipments by around 1.5 million units. According to Luczo, the issue has been resolved. In this case, Seagate had temporary bad news that doesn't appear to have long-term implications.

My opinion is that we can miss the target ourselves by reading too much into Seagate's overestimated numbers.

Dinosaur technology

Another piece of bad news for Seagate is that it is primarily a hard disk drive (HDD) manufacturer at a time when many are enthralled with the rise of solid state drives (SSD). SSD technology offers several advantages over HDD, including energy efficiency and speed. The popularity of hand-held devices, like smartphones, has driven much of the growth for SSD technology.

Is Seagate a purveyor of dinosaur products destined for extinction? I don't think so. For one thing, the rapidly increasing need for data storage should continue to be a catalyst for HDD sales. The economics favor HDD for the next few years, at least.

Also, Seagate isn't allowing the changing world to pass it by. The company developed a hybrid solid state drive that provides near-SSD speeds at a significantly lower cost. It also acquired the HDD business unit from Samsung, which Seagate believes will allow it to better compete in the mobile, cloud, and SSD markets.

To call Seagate a dinosaur technology vendor seems off-base. But, then again, plenty of money is made off dinosaur technology. Just ask the oil companies.

Cheap for a reason

Some investors look at Seagate's numbers and think that a stock this cheap must be a value trap -- cheap for a bad reason. Seagate is definitely cheap. Its forward P/E is barely over three, and its price-to-sales ratio is 0.81. Is there a negative reason that Seagate is this inexpensive?

I suspect that the primary reason is the dinosaur technology fears mentioned above. Primary HDD competitor Western Digital also looks inexpensive, with a forward P/E of less than four.

SSD manufacturers aren't as cheap. Fusion-IO trades at a forward P/E multiple of 63. Fusion-IO became the first company to achieve one billion input and output operations per second earlier this year. That's a significant accomplishment.

Sandisk has a less stratospheric forward P/E of 10. LSI trades at a forward P/E multiple of seven. Neither of these companies garners the buzz of Fusion-IO, but they both are still more highly valued than Seagate and Western Digital.

Whether Seagate is a value trap or not depends whether you think there's a future for HDD, and if you think Seagate can adapt to changing technologies. To me, the answers are in Seagate's favor. I see value rather than value trap.

Driving solid

Even with bad news about missed estimates this quarter, Seagate expects to report record revenue and unit shipments. That's good news -- and there's more. Seagate is still sitting on $2 billion of cash and short-term investments after buying back around $1.2 billion in shares. The company pays a dividend with a 3.9% yield.

The best investing bargains are found in stocks that are cheap, yet still have great potential. Seagate belongs in this club, in my view. This is one inexpensive stock that I think will drive solid profits for investors over the long run."

Thanks Rookiemy...
An interesting article on the HDD industry tho not directly related to JCY
http://www.forbes.com/sites/ericsavitz/2012/04/18/its-time-to-buy-disk-drive-stocks/

Mind to elaborate further?
It is relatively strong this morning.

What is your view?
http://klse.i3investor.com/servlets/ptres/8734.jsp

The global hard disk drive (HDD) industry surged to record revenues in the first quarter, thanks to higher average selling prices that compensated for the wreckage and loss in shipments left by the October floods in Thailand, according to an IHS iSuppli Storage Market Brief report from information and analytics provider IHS.

HDD revenues for the first quarter reached US$9.6bn, an industry high that bested the previous record of US$9.3bn in the first quarter of 2010. The rise in HDD revenues occurred even though shipments during the first quarter of 145m units were less than the 174m units of the third quarter last year, just before destructive floods in October damaged a wide swath of HDD factories located in Thailand. A full recovery to pre-flood shipment levels is not expected until the third quarter, one full year after the disaster.

"Revenues in the first quarter were up because of a rise in HDD average selling prices to approximately US$66.3, compared to US$51.5 in the third quarter before the flooding," said Fang Zhang, storage analyst at IHS. "The ASP will not return to pre-flood levels in the short term and will stay at elevated levels throughout 2012 and 2013, helping the HDD industry make up for some of the losses following the disaster.

Revenues were higher in the first quarter, even though shipments during the same period were well below those in the third quarter before the flood. And like revenues, ASPs climbed to higher levels in the first quarter compared to pre-flood levels.

Among HDD manufacturers, Seagate Technology had the largest share of revenues at 46%, followed by Western Digital at 32%, Hitachi Global Storage Technology at 11% and Toshiba also at 11%. Hitachi GST was acquired by Western Digital toward the end of the first quarter in March, and these shares for both Western Digital and Hitachi GST represent revenues recognized during the quarter, the period prior to the merger.

Number one Seagate's first-quarter revenues of US$4.5bn include all shipments from the recently acquired hard disk business of Samsung. The market leader in HDD revenues for the past decade, Seagate has also held down the top spot in HDD shipments for the last two quarters, after archrival Western Digital sustained heavy damage in Thailand and lost its pinnacle position. Seagate is likely to maintain its perch at the apex in both revenues and shipments for at least another quarter, IHS predicts. Seagate's HDD shipments, including Samsung's output, amounted to some 60.7m units in the first quarter.

For Western Digital, the revenue picture brightens if it includes US$61m from Hitachi GST's three-and-a-half-week revenues after the merger between the two was completed in March. Without Hitachi GST's portion, Western Digital's first-quarter revenues would be slightly below its third-quarter, pre-flood level of US$2.6bn. Going forward, Western Digital expects revenues to hover between US$4.2bn and US$4.5bn, including full contribution from Hitachi GST. Western Digital's HDD shipments during first quarter amounted to 44.2m units, including the Hitachi portion at the time of the merger.

Toshiba's first-quarter revenues of US$1.1bn were, like Western Digital's, below its pre-flood revenues of US$1.3bn in the third quarter. Just recently, Toshiba announced it had completed the exchange of its Thailand manufacturing plant in Pathumani with Western Digital's facility in Prachinburi. Toshiba also has consolidated its HDD production operations in the Philippines and China, reducing scale in each country in order to lower manufacturing costs and improve efficiency. Toshiba, which aims to double its HDD sales to approximately US$10.0bn by 2014, shipped a total of 20.6m HDD units in the first quarter.

Also contributing to a healthier revenue picture for the HDD industry was a rise in gross margins and operating margins.
The higher numbers here were positive indicators of the companies' ability to pay down their fixed costs and were, therefore, reliable barometers of good financial risk.
Seagate enjoyed a gross margin of 37% in the first quarter - a company record mainly due to higher ASPs - and also saw its operating margin reach 27%, up from 19% in the fourth quarter. For its part, Western Digital saw gross margin climb to 32%, and its operating margin also rose to 18%, up from 8% in the fourth quarter of 2011.

Both players expect their gross margins to remain higher in the second quarter, to about 35%.

Bro Chong, thanks for the email and sharing!

ymj, concur with your view. Be mature and act as an adult. Cheers!

If price going up, people praise him as God. If it goes opposite, so many blaims thrown to him. How would one feel if a person is genuine

Jj, coming back with strong faith?

Diablo88, wondering whether the issuers are so careless and not to cover their backside. And why Lamken wanted to openly mentioned the plan and action of the ally, purely ego? Puzzles & puzzles

Bro Chong, apparently i m a latecomer and overlook this gem. Appreciate if you could provide me with a copy of your research @ zhigangwugm@gmail.com. Thanks

Quek likes cigar very much too

tat could be the main course after appetizers are served...

Worth to take note
"....Bursa Securities had vide its letter dated 13 March 2012 approved and had accepted 24.97% of the Company's issued and paid-up ordinary shares of RM0.25 each held in the hands of 8,865 public shareholders as at 29 February 2012 as being in compliance with the Public Shareholdings Spread Requirement pursuant to Paragraph 8.02(1) of the Main LR"

If the price of a stock is managed, I believe that the invisible hand is well versed in TA also. They can set the price and let you interpret the trend in the way they want.

BTW, I am not an expert in TA. Just my 2 cents.

Another question is for Handsome. You made a statement that “Do not keep JCY after 3rd quarter”. Do you foresee profit to turn ugly by then?

Further thought after Diablo88’s comment:

Lamken also provided us with a wealth of information on the sustainability during 31 Mar. By capturing a larger market share, future revenue of JCY could remain high at current level despite normalization of HDD prices eventually.

But my concern is on the future revenue growth. Comparing the current quarter with the preceding one, Q2 revenue only increased by 3% from Q1 and there was little change in the net profit. Has the company turnover reached its peak? Was Q2 sales confined by the maximum production capacity? Are we going to see more than 30% surge in topline during Q3 (with new China plant and effect of RM300mil capital expenditure start flowing in)?

The warrants present an opportunity or threat to the major shareholders? - If one of the two appetizers is the announcement of LTA sealed with Seagate for multiple years, there won’t be any more ambiguity on profit sustainability, be it for Q3 and onwards. Investors, especially institutional ones may flock to buy. The situation is “exacerbated” when the cowboys start to realize that they need to hedge enough now with the mother shares instead of later (after issuing more and more CWs lately).

Lamken, as outsiders, we could only continue to deduce and guess based on information available in the public domain. There are too many what-ifs in predicting the moves of these movers and shakers if without privilege in knowing what transpire.

For example, no one would know it was OSK that pressed down the price after Q1 results if not revealed here. We could only assess market demands, impact of flood and other business information of the company by asking around industry players, professionals or friends / relatives happen to work there. This is always the disadvantage that most retail investors face. That’s why we sincerely cherish your sharing here, not only for financial gains but valuable lessons. Sorry, already side track from your initial topic.

that gd looking guy has been silent for some time....

but lamken, although he cant buy back, the company itself can do it since it was approved in last AGM. Furthermore, he hold 75% and he can easily privatise the company with the current low price since company is making so much money. why meddle with the cowboys and sharks?

Hi lamken, if share price is artificially pressed down, it will affect the main shareholders if they intend to sell or their shares being pledged as collateral or there is placement of shares in most circumstances.

Cheers!

"Everybody who making money on this counter should give 1% to 2% of profit to good charity in thailand when the right time to cash out. We make money becuase JCY benefit so much from flood and flood affect so people in thailand. Lets give something back otherwise will not be very good for future prosperity." - Lamken
Jjtrader, congrats! Hope tat you consider Lamken'ssuggestion, also a meaningful way to appreciate his selfless sharing.
One possible channel is Red Cross Thailand - http://english.redcross.or.th/home

Lamken, appreciate your insights. Also read thru your discussions with cherroy. Really helped in understanding the rationale behind your buy call.

Fully agreed with John that we are responsible for our own investment decisions. But your clarity in explanation has definitely made a difference. Thanks a lot for sharing.

Hi lamken, cimb has a trading buy call on JCY today but with the following caution. Would the "expected" surge in share price be short lived? Appreciate your view on this. Thanks for sharing

"Expect favourable newsflow such as record
quarterly earnings from HDD OEMs. However, we
need to be watchful of the pricing environment
when JCY’s competitors are back to normal
production in 3Q12."

"Be watchful of HDD competitors’ recovery
Our discussions with some of the component makers (HDD-related and non-HDD related) that were affected by the flood in Thailand revealed that most of them should return to pre-flooding capacity in 3Q12. Only the small unlisted companies may face financial difficulties in restarting their operations. For instance, Nidec, the world’s largest HDD motor supplier, recently told investors that its base plate production (through the acquisition of SGX-listed Brilliant Manufacturing in 2006-07) is expected to return to pre-flooding capacity of 85m units/quarter in 1Q12 and further increase to 100m/quarter in 2Q12. Compart, Broadway subsidiary, is also expected to restart its Thailand APFA assembly production in 1Q12 and return to full production in 2Q12."

mcd123, not a surprise, it makes us feel refreshing when the market is dull...

Another piece of article on its potential

http://www.malaysiafinance.blogspot.com/2012/03/finally-stock-worth-considering.html

hi limggb, jus sent over

Hi Xin Li, got the email, thanks for sending!

Hi Xin Li, is it possible to forward it to zhigangwugm@gmail.com? Afraid that Lamken is occupied by the requests. Thanks!

Lamken, sorry to bother you again. haven received it and not in the spam folder as well. appreciate to resend it to zhigangwugm@gmail.com. TQVM

Hi Lamken, it is tedious for you to compile the new emails. Have added on the new requests from 3:55pm till 4:12pm as follows:
junhui_85@hotmail.com
bryan_kwoon@yahoo.com
alvin_ntm@yahoo.com
nur500@hotmail.com
stockist83@hotmail.com
zhigangwugm@gmail.com
njue76@yahoo.com.my
stynner-ii@hotmail.com
nkkong2486@gmail.com
roxanne_tay@yahoo.com
lai.pei.san@gmail.com
Hope tat one person who has received yr email will forward it to tis group. Thanks

Hi Lamken, appreciate if you could add zhigangwugm@gmail.com into yr distribution list too. Thks!