Eng & Dufu- the cheaper HDD players

There are a few companies involved in the production HDD components. The biggest company is the recently-listed JCY International Bhd ('JCY'). The next biggest player could be Eng Teknologi Holdings Bhd ('Eng'). Other players include Dufu Technology Bhd ('Dufu') and Notion VTEC Bhd ('Notion') — both produce components for HDD, while the latter also makes components for single-lens reflex (SLR) cameras. For more on technology stocks, go here.

Based on Table 1 below, we can see that Eng is trading at a lower PER than JCY. Between the 2 smaller players, Dufu trades at a lower PER multiple than Notion.


Note: Closing prices as at Mar 9, 2010.
Table: HDD players' results for QE31/12/2009 & QE31/12/2008

The financial position of Eng & Dufu are fairly satisfactory. As at 31/12/2009, Dufu's current ratio & total debts to shareholders' funds stood at 1.9 times & 0.34 time, respectively. At the same time, Eng's current ratio & total debts to shareholders' funds stood at 1.9 times & 0.29 time, respectively. The attractive valuation may explain why Eng has risen sharply for the past one year, from a low of RM0.50 to the present price of about RM2.40. Dufu's price run-up has been a subdued affair, rising from a low of RM0.30 in early 2009 to the present price of RM0.55. Based on the above, I believe Eng & Dufu could continue to see buying support & higher prices ahead.


Chart 1: Eng's monthly chart as at Mar 1, 2010 (Source: Tradesignum)


Chart 2: Notion's weekly chart as at Mar 8, 2010 (Source: Tradesignum)


Chart 3: Dufu's weekly chart as at Mar 8, 2010 (Source: Tradesignum)