PETALING JAYA: Dufu Technology Corp Bhd
expects digital storage devices to grow in sync with the strong demand from the cloud data center market in the long term, supported by robust growth of data.
In a filing with Bursa Malaysia, the precision machining parts and components manufacturer stated the hard disk drives (HDD) storage devices are expected to remain the most cost-effective solution for storing large volumes of data.
For the second quarter ended June 30, 2023 (2Q23), Dufu’s revenue dropped by almost 50% year-on-year (y-o-y) to RM47.7mil due to the lower revenue related to HDD components and sheet metal fabrication. Net profit decreased by 89% y-o-y to RM3.3mil or earnings per share of RM0.60 sen per share as a result of a drop in revenue and increase in operating costs namely labour and energy as well as a drop in economies of scale.
“Considering the ongoing customer inventory correction in the HDD business, we anticipate a potential demand recovery to commence only at the beginning of 2024. Consequently, we expect the group's financial performance in the fiscal year 2023 to be considerably lower compared to the previous year, given the reduced demand from customers, challenging operating conditions, and uncertain market circumstances,” the company said.
Overall, Dufu Technology cautioned against an unstable outlook for its earnings growth in the near term. The group noted there is a slowdown in consumer spending in the US and Europe given the high inflation.
“In China, consumer spending initially surged after the easing of Covid-19 restrictions earlier this year but has now declined due to a bleak economic outlook. This decline in consumer spending, coupled with rising interest rates and persistent inflationary pressures, has led to reduced capital expenditures by enterprises and cloud providers,” the company said.
Hence, the demand for HDD and other semiconductor-related fabrication equipment are negatively impacted. Locally, Dufu Technology said the increased energy costs resulting from electricity tariff adjustments through the Imbalance Cost Pass-Through mechanism will also further affect its profitability.
Going forward, the group will remain committed to streamlining its business structure, enhancing its processes, and optimising operations.
