I suppose Cheung Woh's shareholders and potential investors ought to look beyond Q3 (ended 30Nov11) and even Q4 (ending 29Feb12), bearing in mind WD's and, to a lesser extent, Seagate's HDD production volume have been temporarily affected/cultailed by the ended Thai floods and the resultant shortage of some key components. It is a given that both WD and Seagate will have to ramp up HDD production volume asap to order to meet the current pent-up demand and global shortage of HDDs. One good thing for Cheung Woh is that as the group has no plants in Thailand and therefore its production capacity remains intact and ready to go, so when WD and Seagate ramp up production again in the next few months, Cheung Woh's production will follow suit and gets ramped up. I would imagine Cheung Woh is likely already well underway in manufacturing the semi-finished VCB and air comb parts in volume, in anticipation of the coming major ramp-up by WD and Seagate.
The anticipated substantial foreign exchange loss in Q3 due to the capital reduction of Tysan Corporation Pte Ltd, a subsidiary, should be accounting in nature, as the capital reduction exercise is the 1st step in Cheung Woh's planned disposal of its majority interest in the PRC-based vehicle parts business for cash to its PRC partner, which is scheduled to complete by end-Feb12. We should also bear in mind that it is probably in anticipation of a net cash B/S after the completion of the disposal that Cheung Woh's management and BOD have initiated the recent active buying back of shares.
Cheung Wohâs founder, Chairman and major shareholder KY Law bought 5,591,040 shares from
DBS Bank pursuant to a sale and purchase agreement dated 19 July â12 (price on this date was 18 cents), increasing his stake from 60.2% to 62.03%. -- Lim & Tan Securities
