What’s Up? Notion

Notion

What’s NEXT! … dated Jan 2011

It posted a net profit of rm37.43 million for FY2010 ended Sept 30, 2010 on the back of rm226 million in revenue.

But are the headwinds over for the HDD components maker?

The company is expecting its camera components to bring in revenue of more than US$30 million a year.

For FY2010, the camera components business contributed 44% to Notion’s total sales. Its main customer is Nion, which holds a 9% stake in the company, but the company has also begun supplying parts to Sony and Canon.

Its official says the camera business segment is expected to grow to 55% in FY2011 as Nikon has committed to a new camera barrel project. Contribution from HDD parts, could fall to 35% from 44%. It has Nikon as its main customer and orders are expected to increase. The camera section could well be the growth story for Notion in 2011.

There are also plans for the company to produce aluminium ingots that could potentially contribute about rm60 million to its revenue per year. Aluminium is the main raw material for Notion’s end products and the plants will produce ingots from scarp.

There is certainly upside as Notion is heading in the right direction, as there are higher margins in the camera division. It has also conformed that it will be doing sub assembly of SLR lenses for Nikon and Nikon will give it more jobs as the former sharpens its skills.

Notion is applying for MSC status as a tooling technology and HDD and camera products are deemed industrial components. This could result in potential tax benefits of rm8 million to rm10 million per year for Notion.

As for the troubles at is new 2.5 inch HDD base plate plant, the official says the quality issue has been solved. However, utilization rate has been low. However, the capex was only rm38 million and most of it was in machines which can be re allocated to the other segments.