(Post date : 15 August 2010)
What happen to Notion Vtec Berhad?
Notion Vtec Berhad, through its subsidiaries, manufactures and sells precision components and tools in Malaysia. It engages in the design and volume metal machining of high-precision components for the hard disk drive, computer, consumer electronics, and electrical and automotive industries' components, as well as related research and development activities.
The company also involves in the design, development, manufacture, and marketing of precision jigs and fixtures, tools, and dies for stamping; precision mould parts for plastic injection; trim and form tools for semiconductor industry; and precision machine parts for the automotive and other high-value added industries. In addition, it designs, develops, and modifies special cutting tool geometry; regrinds or resharpens special cutting tools using computer numerical control (CNC) tool and cutter grinder, and other grinding operations; and markets diamond abrasive grinding wheels, polycrystalline diamonds, and polycrystalline cubic nitride inserts.
Further, the company engages in the design, development, and mass production of high-precision micro parts, and related research and development activities; and research and development activities leading to the design and production of the air chuck assembly system, tool-holders, gauges, dies, collets, and lathe chucks for use in CNC machining applications. Additionally, it involves in the design of tooling and volume manufacturing of precision appearance parts using progressive die-stamping for digital cameras, MP3 players, and other consumer electronic devices. Notion Vtec Berhad was founded in 1995 and is headquartered in Klang, Malaysia.
Notion Vtec has dropped a lot since July 2010, now is at about RM 1.83 to RM1.85. From the chart, we may see the lowest stock price is at about RM0.80 during March 2009, while the highest about RM3.52 during January and March 2010. The stock price reach the top price twice in different period of time which is Jan and March 2010, this is normally labelled as the double top according to technical analysis. And according to the theory, normally after double top, stock price will be subjected to downtrend. So who said technical analysis is not important or not true?
Isn’t it nice if the investors are able to sell off all the stock after they confirm the double top without listening to the financial analyst who always keep a buy for the stock at any point of time? If we as investors able to identify the double top meaning, and start to sell off the stock since then, we might escape from this horrible drop!!! So, do not underestimate the power of the technical analysis.
After forming the double top, stock price touch the same top price for twice in different time, Notion stock has gradually show sign of weakness since March 2010. But the horrible drop that started on July was mainly due to the poor performance from 3 factors: initial start-up cost of new projects;quality issue in relation to the 2.5" baseplate (HDD component) project; & weaker USD & EURO. Besides the quality issued in relation to te 2.5” baseplate project, Notion may face some problem of declining demand for HDD which was in turn due to a slump in the demand for netbook.The slower demand was due to a shift in demand from netbooks to iPad. Notion does not expect its net margin to imporve in the next quarter.
Now, its hard for investors to believe that Notion stock price is in the range of RM1.83 to RM1.85. Currently the stock is in lateral range. But from the newspaper, Notion said it does not expect its net margin to improve in the next quarter. And as investors we should look around for the future market sentiment, is it going to be good or worse? According to the theory of te technical analysis, after te lateral range, normally the stock will follow the trend that happen before the lateral range, in this case is downtrend. It is possible for the stock price to continue dropping in coming quarter. How much it will drop? Well, this is not sure, any point is possible, but hopefully it wont go back to the lowest point since March 2009. It will burn the pocket for many investors. Remember, anything is possible in stock market.
Written by Aishah Mustaphah
Wednesday, 07 July 2010 11:33
KUALA LUMPUR: Notion Vtec Bhd is poised to begin the first-phase operations at its largest hard disk drive (HDD) manufacturing plant in Klang by early next month, the entire development of which will cost RM150 million over the next two years.
Under a three-phase development, the new 200,000-sq ft facility will eventually have a total production capacity of 84 million 2.5-inch HDD baseplates annually, a significant boost from the current four million baseplates.
The rollout of the first phase entails production of 24 million pieces a year, with Samsung as a major client.
The first phase will be partly funded through the company’s latest proposed private placement of new shares of up to 10% of the company to institutional investors.
The placement proceeds are expected to total RM45.9 million and will be used to buy new equipment and machinery costing up to RM78 million and renovation of RM2 million. The remaining capital expenditure for the first phase and for the second and third phases will be generated from internal funds and bank borrowings.
Last January, Notion Vtec raised RM33.78 million from placing out a 10% stake to its client, Nikon Corporation, towards expanding its single lens reflex (SLR) camera parts manufacturing plant in Thailand.
Speaking after the group’s EGM here yesterday, Notion Vtec’s executive chairman Thoo Chow Fah said its current placement would not go towards another client. “We are looking at a few institutional investors to come in,” he said.
For its second quarter ended March 31, 2010 (2QFY10), the group’s revenue growth was flat at RM56.7 million versus RM56.3 million in the preceding quarter. Revenue contributions are currently derived from HDD (48%), SLR camera (36%), and industrial/automotive (16%).
2QFY10 net profit fell to RM12.2 million from RM14 million a year earlier due to the initial start-up costs of new projects in Thailand and the baseplate project, earnings from which would only come onstream in the following quarters.
For the six months to March 31, 2010, Notion Vtec’s revenue totalled RM113 million and net profit was at RM26.2 million. Year-on-year, revenue and net profit were 54% and 122% higher, respectively. The strong growth is attributed to recovery in all its business segments.
As at March 31, 2010, its long-term borrowings stood at RM52.28 million while short-term borrowings came up to RM25.9 million, while shareholders’ equity amounted to RM224.12 million, giving a gearing of 0.35 times. Cash and cash equivalents stood at RM56.85 million.
For this year’s outlook, Thoo expects strong growth from the SLR camera segment, after last year’s economic downturn.
“I see Nikon’s growth as very strong, especially coming to the end of this year,” he said, adding that the production of the new facility will have much of a positive impact on its bottom line this year, but that would be seen next year instead.
As solid state drives (SSD) are making headway towards replacing some usage of HDD, Thoo believed that HDD would have a shelf life within the next 10 years.
“As we go along, we are always aware of disruptive technologies. As for SSD, I believe there will be a complementing space for both of them. HDD is still one of the cheapest and reliable sources of storage for another 10 to 15 years. We are also moving into the 2.5” HDD as well as 3.5” HDD,” said Thoo.
The 2.5” HDD is typically used for mobile devices such as laptops while the 3.5” HDD is pervasive in personal computers.
Thoo said the group was constantly looking at cost-cutting measures. He said it was looking at recycling scrap aluminium that could serve as raw materials for its HDD baseplates. “We have found a site for it and we are now waiting for approval,” said Thoo.
This article appeared in The Edge Financial Daily, July 7, 2010.
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