JCY's 4Q profit surges over 4.5 times on stronger US dollar

by **Cals** Mon 23 Nov 2015, 22:20

JCY's 4Q profit surges over 4.5 times on stronger US dollar

By Sangeetha Amarthalingam / theedgemarkets.com | November 23, 2015 : 8:01 PM MYT

KUALA LUMPUR (Nov 23): A stronger US dollar exchange rate boosted [size=16]JCY International Bhd ([You must be registered and logged in to see this image.] Valuation: 2.40, Fundamental: 2.50)'s net profit in its fourth quarter ended Sept 30, 2015 (4QFY15), which surged a little over 4.5 times year-on-year to RM75.6 million or 3.7 sen per share.

The hard disk drive (HDD) mechanical components maker recorded a profit of RM16.5 million or 0.81 sen per share in the same quarter last year, its filing to Bursa Malaysia today showed.

Revenue, however, was only up a marginal 0.75% to RM465.9 million in 4QFY15 compared to RM462.4 million last year, because while it enjoyed a better average exchange rate of the greenback against the ringgit, it saw lower sales volume.

The improved earnings saw it declaring a fourth interim dividend of three sen per share for the financial year ended Sept 30, 2015 (FY15), to be payable on a date to be fixed, compared to one sen per share in the same period last year.

This brought its full year's dividend to 6.75 sen versus 4.25 sen in FY14.

Meanwhile, JCY's full year net profit came in at RM209.5 million, a 91% spike from RM109.9 million seen in FY14.

Revenue, though, improved only a marginal 4.02% to RM1.94 billion compared with RM1.87 billion in FY14

"The improvement on profit after tax was due mainly to the higher revenue (from the US dollar exchange rate), improved operational efficiency in the reporting periods, and [an] exchange gain [that] resulted from translating financial assets and liabilities for the reporting periods," it said.

In a statement, JCY said its net asset stood at RM1.3 billion at the end of the financial year, which translates to 63.1 sen net asset per share.

Moving forward, it said the outlook for HDDs remains favourable in the near future, with the announcement of a new major data centre storage initiative in China, and a new strategic investment in HDD manufacturers.

However, it noted that production would continue to be affected by labour costs, with the minimum wage increase effective from July 2016.

"Workers' welfare requirements, as required by the Electronic Industry Code of Conduct, are expected to increase our production cost per worker.

"However, JCY has been successful in automating many of its production processes and has managed to reduce its workforce significantly. These efforts will continue.

"We will continue to leverage our competitive strengths and to intensify our efforts on improving our operational efficiencies," said JCY.

It closed one sen or 1.12% lower at 88 sen for a market capitalisation of RM1.8 billion.

(Note: The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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