JCY (TP: RM1.35) - Explosive Demand for Enterprise HDD

Trading Buy with 100% upside. Our fair value of RM1.35 is based on FY21E PER of 18.7x, in line with its 3-year mean. We like JCY for being: (i) a close proxy to the massive upcycle in the HDD market due to data centre expansion, (ii) able to enjoy higher order volume and ASP owing to supply chain consolidation, and (iii) proactive in diversifying revenue stream by venturing into the automotive market. Net profit in FY21E is expected to grow 3x to RM150.8m as the group takes on higher loading volume in 2H 2020 and into 2021

Source: Kenanga Research