KUALA LUMPUR: CIMB Research is maintaining its Outperform call on JCY International but lowered its target price from RM2.28 to RM1.88.

The research house said on Monday, Aug 23 the hard disk drive manufacturer’s 9MFY9/10 core net profit was at 69% of its full-year forecast and 64% of consensus.

It said JCY’s 9MFY9/10 core net profit was below expectations due to lower-than-expected sales resulting from a higher contribution from 2.5” products and the weaker US dollar. Third quarter core net profit rose 6% to RM59.3 million.

“We are cutting our FY10-12 EPS by 11-18% for lower sales and gross margins. Accordingly, our target price, which is based on 12x CY11 P/E, falls from RM2.28 to RM1.88.

“But we are keeping our Outperform rating as we believe the market has priced in the near-term earnings weakness. We continue to like JCY’s scale and leading position, which we believe will enable it to gain market share in this competitive market down the road,” it said.