Cash-rich JCY eyes overseas acquisition

KUALA LUMPUR: Hard disk drive (HDD) manufacturer JCY International Bhd, which has a cash hoard of RM242 million, is looking to acquire overseas companies in order to diversify its customer base.
"The cash reserve that we have is very healthy. If there is any customer base that we are not in, we would like to look at it," its finance director Datuk James Wong told reporters after announcing the group's fourth quarter results (Q4FY15) here yesterday.
"We are also looking at the geographical area of the companies, in terms of the proximity and where the factories are," he said, but declined to disclose the location of the companies it is eyeing.
Wong said JCY has manufacturing facilities in Johor, Malacca, Penang, Thailand and China, with about 16,000 workers worldwide.
Commenting on the increase in the monthly minimum wage effective from July next year, he said it may not significantly affect the group's labour cost, which makes up 27% of its total production costs, as 85% of its local staff are already paid more than RM1,000.
The minimum wage for workers in Peninsular Malaysia wi
ll be increased to RM1,000 from RM900 currently.
The group already plans to reduce headcount, to 9,000 from 14,000 currently, over the next three to five years, as part of its strategy to be cost efficient in the long run.
On the industry outlook, Wong said declining personal computer (PC) sales have not in turn driven sales of HDDs down, as the devices are also used in enterprise cloud and personal cloud computing, and in closed-circuit television systems and game consoles.
He added that the HDD remains the cheapest choice as flash capacity or flash memory devices, which comprise USB drives, solid state drives and camera memory cards, are expensive.
Therefore, Wong said, the outlook for HDDs remains favourable, given recent developments within the industry, including new strategic investment by HDD manufacturers and the announcement of a new major data centre storage initiative in China.
For the fourth quarter ended Sept 30, 2015, JCY saw its net profit surge more than threefold to RM75.6 million, from RM16.5 million in the previous corresponding quarter, on the back of higher revenue, improved operational efficiency and exchange gain resulted from translating financial assets and liabilities.
Revenue for the quarter grew 0.8% to RM465.9 million, from RM462.4 million a year ago, due mainly to the better average exchange rate of the US dollar against the ringgit, amid lower sales volume.
For FY15, the company's net profit increased 91% to RM209.5 million from RM109.9 million last year, while revenue went up 3.7% to RM1.94 billion from RM1.87 billion previously.
JCY is one of the largest precision engineering manufacturers of HDD mechanical components in the world. It produces base plates, actuator pivot flex assemblies, top cover assemblies and antidiscs and supplies components to global IT giants such as Western Digital, Seagate and Toshiba.
JCY's share price closed 2 sen lower at 86 sen yesterday, with some 31.6 million units traded.