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Kim Eng research:
���� Within expectations
Within expectations3Q06 revenue fell 41% Y/Y, while net profit rose 9% to $18.6m. Net profit of $52m for the nine months to Sept 2006 met 72% of our full-year forecast of $72m. Gross profit actually jumped 34% Y/Y, but was diluted by higher operating expenses (e.g. $6m of the $9.1m increase was due to higher equipment rental in new start-up locations, part of Jurong Tech?s risk management measures).
���� Accessories business more than doubled
Accessories business more than doubledThe new wireless accessory business (finally revealed to be battery pack assembly for Motorola in Tianjin and Brazil) did very well, with revenue up 141% Q/Q to 17% of total sales from just 8% in 2Q06. Since production only started in May, there were no contributions in Q106. All product segments, except HDD (as expected) and networking (a very small business), registered sequential growth.
���� Wireless to remain the key driver in 2007
���� Wireless to remain the key driver in 2007Jurong Tech is guiding for the wireless accessories business to grow to at least 30% of revenue in 2007 as it is a new business starting from a low base, and the company is gaining market share from existing suppliers as customer Motorola is intent on consolidating the supply chain. PCBA is also expected to remain strong due to the continuing success of Motorola?s new models (e.g. KRZR, MotoQ and MotoMing).
���� But balance sheet needs to be re-jigged
���� But balance sheet needs to be re-jiggedNet gearing of 0.9x is a bit worrying. However, Jurong Tech seems to be managing the financing burden well. It is also exploring options to strengthen its balance sheet, although new equity does not appear to be among them and management seemed to be wary of hybrids.
Converting more borrowings to longer-term loans is a certainty though, despite the slightly higher costs.
���� Full-year growth on track; Maintain BUY
Full-year growth on track; Maintain BUYJurong Tech is on track to deliver 10% full-year growth, with management guiding for sequential growth in Q406. For now, we forecast 12% growth in 2007, but given present momentum, it could very well do better. We maintain target price at $1.31 or 7x 2007 earnings.
No fantastic news to move the counter now. Need to hold longer if vested.
See if it could support at $1.08.
found support at $1.11.
Down trend but oversold.
Should move up any time.
Looks like it should be able to stay above 1.12.
But only 7 trades done this morning, seems like big boy is staying sideline.
What happen? Any one got any idea?
Can take analysts' target price only as reference these days .... don't read too deep into them. Trust only yourself and always your own homeworks.
Have vested in this counter previously, but nothing very exciting to boost its share now (just my opinion).
now directionless, I think support is @1.14. last sold at 1.20 and it went to 1.23, cursing then but now eyeing to enter again if it stay above 1.14
Credit Suisse says it has increased its target price to $1.48 from $1.38 after lifting its forecasts of earnings for the company because of its outlook.
Credit Suisse believes the company's new wireless accessory contract with Motorola could result in $500m in sales next year, giving it scope to raise its estimates of earnings.
However, the research house expects the effect of the wireless accessory contract to be muted by the loss of $300-350m -worth of orders for hard-disk drives.
"We do not expect Jurong Technologies to return to its previous high of 10-12x price-earnings, given that growth prospects are slower now, but as contributions from the wireless accessory become more evident, we see scope for the stock to re-rate from the present 6-7x price-earnings," Credit Suisse said in a note.
It fell on fears that weaker-than-expected quarterly profits at Motorola would hurt the contract electronics maker's earnings. Jurong Tech makes handsets for Motorola, which is one of its key customers.
Motorola, the world's second-biggest maker of mobile phones, on Tuesday posted a 45% fall in third-quarter profit and disappointing revenue growth as sales of mobile phones and wireless network equipment were weaker than expected.
Hello,
Anyone out there can tell me why there is such a big jump of $0.08 for Jurong Tech ?
Thank you.