Its Prospects
According to WD and Seagate, the floods in Thailand will cause a shortage of at least 50 million HDDs in 4QFy2011 compared with a demand for 180 million. The facilities of HDD component markers such as Notion and Eng were also flooded.
Production can only return to pre-flood levels at the end of 2012.
The floods have been a blessing in disguise. Before that, the average selling price of HDDs was dropping by around 2% to 3% every quarter. But the floods caused a shortage, which pushed up the ASP. HDD prices have risen by as much as 20% since the floods.
JCY is in a better position than other component makers because of its product mix. The company produces four types of components used in a HDD – the base plate, cover plate, actuator and antidiscs.
Some of its competitors produce single components but their machines were submerged by floodwater. Thus, JCY is the only supplier of some of the components for its vendors. It is the biggest supplier of base plates and cover plates to WD and is a top supplier of antidiscs to Seagate.
Since the floods, these vendors have requested bigger supply of components due to shortage and has also led to higher ASP while its costs remains the same. HDD demand will continue to be strong and a higher ASP will persist until 2012 as it will take about 6 to 12 months for the other component makers to resume operations.
Observers note that it will take about six months for the affected manufacturers to assess the flood damage receive payment on insurance claims. The companies will also need to reinvest in new machines and obtain quality approval from the vendors.
They also need to decide whether they will continue to run operations in Thailand in cas of floods in the future.
JCY CEO reckoned that HDD will not be replaced by SDDs. The usage and applications of SDDs and HDDs are distinct. SDD are used for gadgets such as tablets and netbooks while HDDs are used in desktop computers and laptops. SDDs will not replace HDDs in computers anytime soon as the former lacks the capacity HDD will continue to be the cost efficient drive used for mass date stoage.
With the advent of digitalization and cloud computing, massive media files will continue to be stored in media centres that use HDDs. While Ipads are used to view photos and watch movies, users will download and store their pictures and motives in HDDs. In addition, as cloud computing flourishes, media files will be stored in servers that demand large capacity at competitive prices. Thus the demand for HDDs will continue to grow in the future.
In 4QFY2012 ended Sept, JCY returned to the black with rm20.44 million in net profit. The improved earnings were also due to favorable exchange rates and improvement in operational efficiency.
JCY will also able to increase its capacity by another 20% to meet demand.
Given that the floods, increased orders and strong US dollar, JCY is optimistic about better results in the future.
As at Sept 30, JCY had rm93.56 million in cash and bank balances while short term borrowings stood at rm225 million. Based on its shareholders’ funds of rm512 million, it has a net gearing of 0.26 times.
Production can only return to pre-flood levels at the end of 2012.
The floods have been a blessing in disguise. Before that, the average selling price of HDDs was dropping by around 2% to 3% every quarter. But the floods caused a shortage, which pushed up the ASP. HDD prices have risen by as much as 20% since the floods.
JCY is in a better position than other component makers because of its product mix. The company produces four types of components used in a HDD – the base plate, cover plate, actuator and antidiscs.
Some of its competitors produce single components but their machines were submerged by floodwater. Thus, JCY is the only supplier of some of the components for its vendors. It is the biggest supplier of base plates and cover plates to WD and is a top supplier of antidiscs to Seagate.
Since the floods, these vendors have requested bigger supply of components due to shortage and has also led to higher ASP while its costs remains the same. HDD demand will continue to be strong and a higher ASP will persist until 2012 as it will take about 6 to 12 months for the other component makers to resume operations.
Observers note that it will take about six months for the affected manufacturers to assess the flood damage receive payment on insurance claims. The companies will also need to reinvest in new machines and obtain quality approval from the vendors.
They also need to decide whether they will continue to run operations in Thailand in cas of floods in the future.
JCY CEO reckoned that HDD will not be replaced by SDDs. The usage and applications of SDDs and HDDs are distinct. SDD are used for gadgets such as tablets and netbooks while HDDs are used in desktop computers and laptops. SDDs will not replace HDDs in computers anytime soon as the former lacks the capacity HDD will continue to be the cost efficient drive used for mass date stoage.
With the advent of digitalization and cloud computing, massive media files will continue to be stored in media centres that use HDDs. While Ipads are used to view photos and watch movies, users will download and store their pictures and motives in HDDs. In addition, as cloud computing flourishes, media files will be stored in servers that demand large capacity at competitive prices. Thus the demand for HDDs will continue to grow in the future.
In 4QFY2012 ended Sept, JCY returned to the black with rm20.44 million in net profit. The improved earnings were also due to favorable exchange rates and improvement in operational efficiency.
JCY will also able to increase its capacity by another 20% to meet demand.
Given that the floods, increased orders and strong US dollar, JCY is optimistic about better results in the future.
As at Sept 30, JCY had rm93.56 million in cash and bank balances while short term borrowings stood at rm225 million. Based on its shareholders’ funds of rm512 million, it has a net gearing of 0.26 times.
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