♦ Higher costs. The company’s initial capex of RM80m was to expand
capacity for the 2.5’’ baseplate capacity to 5m/month in FY9/11 and
7m/month in FY9/12. However, due to higher-than-expected rejected rates,
management now expects to hold production capacity at 2m/month in
FY9/11. We believe the excess capacity and operational issues will dampen
the earnings outlook in the medium term. Management stated that it will
review plans for the 2.5” baseplate, and potentially “cut loss” on the project
within the next nine months.
Notion Vtec Berhad : Limited Visibility - 09/08/2010
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