Things Getting Back To Pre-Floods Level Swiftly For Notion Vtec

The key to the announcement is the 3 new HDD clients, we can expect the earnings to even surpass pre-floods levels, but the share price is nowhere near RM2.30 yet.

Description	:	Notion (Thailand) Co. Ltd Factory affected by Floods
Announcement Details/Table Section : Further to the announcements made on 11 October 2011 and 23 November 2011,  the Board of Directors of the Company wishes to update on the impact to the Group  arising from the floods on the operations of Notion Thailand Co. Ltd (“Notion Thailand”)  as follows:- 1) Following the dry out by end November 2011, Notion Thailand’s factory located in  Ayutthaya had to be cleaned out and all affected stock and inventory were recovered.  Work-in-Progress and finished goods were sent back to the Group’s factory located in  Klang for cleaning and recovery. 2) Electrical, telecommunication and water supply were fully restored soon after the  drying out. 3) The process of insurance claim is still on-going and only expected to be completed by  March 2012. 4) Notion Thailand will now recommence operations of anodising and sub-assembly of  lens before June 2012 but all support for the Single-lens Reflex (“SLR”) camera  segment will be from the main Klang factory. As a result, the financial impact of the loss  of revenue to the Group arising from our affected Thai factory will be minimal as  Notion Thailand contributed less than 3% to the Group’s revenue. 5) The Group’s business outlook has turned for the better with a strong recovery in  January 2012 sales to much higher than pre-flood level. The trend is expected to be  upwards for the remainder of the financial year ending 30 September 2012 (“FY2012”)  and beyond as the Hard Disk Drive (“HDD”) segment is expected to be in short supply  until mid 2013 due to backlog of orders. The average selling price of HDD is expected  to remain above pre-flood level for multi-quarters ahead. 6) One of our major HDD customers is reportedly estimating full pre-flood operations  by September quarter 2012. 7) With the entrance of 3 new Japanese major customers in the HDD segment and the  ramp up in HDD component sales, we expect FY2012’s revenue to grow in strong  double digit over FY2011. The sustainability of this new business is expected to be good  as the customers’ commitment is assumed to be long term. 8) Meanwhile we expect robust camera orders in February 2012 onwards as the camera  segment is expected to be on route to full pre-flood operations by March 2012 while the  Auto/Industrial segment remains stable. The above is internal management’s estimation and is not a forecast or projection and has  not been reviewed by our external auditors. This announcement is dated 10 February 2012.

Something's Brewing In Notion Vtec

OK, the Nasdaq has gone to an 11 year high. More localised news, the Thailand floods wreaked havoc on the HDD and related components supply chain. While this blog picked it up at 50 sen, JCY's current price and dramatic change in fortunes seems implausible 2 months back.



If you look at the recovery in Notion Vtec, it was OK but nowhere as spectacular as some of the rest in the same industry. There is still a lot of unknowns and uncertainty as to who are the real winners and losers from the Thailand floods.





While JCY did not see any of their factories affected, and they benefited from strong additional clients. I think some investors still think Notion Vtec came off from the floods worse than before. Management has guided analysts that 1Q2012 will see revenue declining 40% q-on-q. However, there are strong newsflow from the industry that Notion Vtec actually benefited significantly from the floods as well. Apparently their Thai factory which was affected only contributed a small portion of revenue.



If one were to dig deeper, fortuitously, they have excess capacity in Klang, and it appears that they have ramped up production there owing to the fact that they have secured 3 new big clients owing to the redirection of logistic supply chain away from the affected areas in Thailand.


Some are hinting that profits and revenue are even higher now than their results prior to the floods. If that is going to be the case, then the share price should be closer to RM2.40-2.50 and not dawdling below RM2.00.



Notion Vtec mother share price and volume:

03/02/2012	1.97	1.91 - 1.97	1.91	-0.06 (3.05%)	506,800
02/02/2012	1.96	1.94 - 1.99	1.97	+0.01 (0.51%)	175,800
31/01/2012	1.94	1.92 - 2.03	1.96	+0.02 (1.03%)	1,654,800
30/01/2012	1.84	1.82 - 1.94	1.94	+0.10 (5.43%)	890,800
27/01/2012	1.83	1.80 - 1.84	1.84	+0.01 (0.55%)	270,000
26/01/2012	1.82	1.82 - 1.86	1.83	+0.01 (0.55%)	305,300
25/01/2012	1.85	1.82 - 1.86	1.82	-0.03 (1.62%)	189,300
20/01/2012	1.84	1.84 - 1.85	1.85	+0.01 (0.54%)	45,000
19/01/2012	1.86	1.83 - 1.86	1.84	-0.02 (1.08%)	93,100

However, if you want to spot something brewing, the sharp uptick in the warrants and volume as well over the past few days may indicate some substantive good news or corporate developments to follow soon.




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