MAGNIFICIENT 7 SPENDING ON DATA CENTER EXPANSION GIVING SEAGATE A BIG LIFT UPWARDS, WHAT ABOUT MCLEAN?

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If you had been following my updates on Mclean, you would know that Mclean major customer in surface treatment and cleaning services is mainly provided to SEAGATE in Thailand and Singapore.

Mclean performance will be highly related to SEAGATE performance.

And now with the MAGNIFICIENT 7 company pumping in multi billion into data center to cater for the coming demand from GENERATIVE AI. While high end graphic processor from NVIDIA is the main actor in GENERATIVE AI, the whole equation cannot be completed without ample of storage capacity, where SEAGATE HDD will come into play.

Let's take a look at how much big corporate are spending into the next generation data center.

Microsoft, OpenAI plan $100 billion data-center project, media report says | Reuters

Microsoft + Open AI = USD 100 billion

Oracle (ORCL) Sales Beat Estimates as Cloud Growth Stabilizes - Bloomberg

Oracle unveils $10B data center expansion plan | Construction Dive

Oracle, USD 10 billion

Google to invest $1 billion in UK data centre | Reuters

Google expanding on UK data center - usd 1 billion

Amazon Bets $150 Billion on Data Centers Required for AI Boom - Bloomberg

Amazon - usd 150billion 

Meta projects $35 Billion expenditure in 2024, mostly on AI data centres - The Tech Capital

Meta, Facebook - USD 35 billion

With so much interest being center into AI and Generative AI, analyst are looking at spending capex of more than USD 1 trillion by 2027

 

Data center capex could top $1 trillion by 2027 thanks to AI (silverliningsinfo.com)

Seagate as the leading HDD supplier in market command 43% of market share. With the latest launch of HAMR HDD, SEAGATE will be looking to capture more market share back into it's fort.

With a projection of more than USD 1 trillion looking to be spent into data center in the next 4 years, what is going to be of Mclean, being a critical supplier for surface cleaning and treatment for Seagate?

IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.

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MCLEAN TURNAROUND FORTUNE WITH AI

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Mclean had been laying on the low for quite a while after a sensational run from cryptocurrency chia coin craze. The company shareholder then proposed for a new business injection, however the proposed business did not materialize, which might be a blessing in disguise as Mclean is able to focus back on what they do best - providing surface cleaning services to their main customers - SEAGATE Thailand and SEAGATE Singapore.

WHY SEAGATE DEVELOPMENT IS IMPORTANT TO MCLEAN ?

Mclean provide it's expert services in tray cleaning, surface treatment and cleaning to it's main customer SEAGATE. SEAGATE business going up or down is very important to Mclean.

As we can see from chart, SEAGATE share price has some co-relation with Mclean

By comparison, you can see that SEAGATE share price is up during 2021/2022 era, which is almost similar to Mclean 2021 surge which is due to Chia Coin cryptocurrency launching which farm coin using storage space. However, the craze fizzle out as more and more coins come out to the market.

The new surge in HDD storage space demand will be due to GENERATIVE AI entering into production stage. Generative AI will be the next big thing as big corporate like Apple, Google, Meta, Microsoft, Oracle are pumping in more than USD 1 trillion to build data center.

The latest invention from SEAGATE - 30 to 32TB HAMR HDD (Heat assisted magnetic recording) can be scaled up until 50tb in the future. The HDD is on the green light for mass production now and all big corporation is spending big and giving big orders to storage space provider like SEAGATE, WESTERN DIGITAL AND TOSHIBA.

As you know MCLEAN is highly relatable to SEAGATE, the coming GENERATIVE AI push will definitely see SEAGATE going busy for the next 10 years.

For the case of MCLEAN, do you see this as an opportunity or miss?

I will discuss more on Mclean further again.

IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.

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Mclean heading for a better start in 2022 with new HDD customer order and oil and gas industry rebound

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It had been a rough ride for Mclean investor for year 2021. Share price of Mclean had saw a good 300% upswing before settling down around the range of 30 cents.

However, what is still keeping Mclean attractive in 2022 ?

1. HDD segment continue to see better demand in enterprise cloud storage solution.

Seagate, one of Mclean key customer had ramp up production for it's 20TB HDD production to meet mass data growth demand. This will directly improve key performance for Mclean

Seagate Ramps 20 TB HDD Shipments Answering Mass Data Growth | News Archive | Seagate ASEAN

2. Mclean secured new customer with new orders for 2022

In a report sighted, Mclean had indicate on new customer secured for it's services in Thailand for precision cleaning and surface treatment. While it had not indicated which customer, the established HDD player in Thailand will be Seagate and Western Digital.

3. Revival in Oil and Gas industry

Oil and Gas industry had call for more capital investment and ramp up activity in order to meet the demand post covid-19, where economy had start to normalize. The activity in cryptocurrency is also pushing more usage in energy.

Mclean through it's subsidiary DWZ Industries Sdn Bhd is involve in precision cleaning and surface treatment for oil and gas customer. The higher activity ratio in the oil and gas industry will see more demand will contribute to DWZ Industries Sdn Bhd performance.

4. Mclean on a potential breakout with better fundamental outlook

Can Mclean make a cut above the resistant line in 2022 with better outlook from the HDD as well as O&G industry?

At the current price of RM 0.30, Mclean will definitely be a good watch out stock for year 2022.

IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.

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Cryptocurrency shift to farming on disk drive storage space are driving up demand for HDD and will benefit MCLEAN positively in the long run

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If you are my hardcore reader, you would have know that I am an avid investor of Mclean Technologies Bhd (Mclean - 0167).

Mclean had established itself as a strategic partner to Seagate by focusing it's resources at Thailand, which is Seagate main production house for data storage devices (HDD/SSD).

The recent market biggest hype cannot be short of cryptocurrency where many multi millionaire and billionaire start appearing as cryptocurrency start to surge into unbelievable amount.

The pioneer of all cryptocurrency - Bitcoin surged past USD 60k for 1 bitcoin last week.

1 of the major letdown on Bitcoin mining is the very high energy consumption to complete the Proof of Work. Very complicated mathematical puzzle are demanding more high powered ASIC / GPU to compute the solution in order to get rewarded with the bitcoin.

While the global leader are tackling on the issue on global warming, bitcoin energy consumption might not be so friendly in the long run. As an improvement to the cryptocurrency technology, a new coin which is based on Proof of Space and Time is now gaining traction globally.

Meet the new coin - Chia Coin

The Chia Coin launching had been gaining massive traction globally, and momentum are getting real when you start to see HDD/SSD getting sold out in certain region.

https://www.techradar.com/sg/news/this-new-cryptocurrency-could-potentially-cause-an-ssd-or-hard-drive-shortage

investing.com/news/cryptocurrency-news/meet-chia-chinas-new-bitcoin-2476600

If that is not convincing you enough, Seagate share price is reflecting positively with strong upside

As we know that Mclean revenue from surface treatment and precision cleaning come from demand of HDD volume.

Since Seagate is going to ramp up production, we can comfortably expect Mclean to deliver revenue growth and better profit.

At the current price of RM 0.46, Mclean market cap is just RM 90 million.

The previous market correction and adjustment and the positive news development in HDD industry had definitely made Mclean a good attractive target for the long run.

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Can Mclean future growth come from JCY's customer supply chain rationalisation ?

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Hello all... The latest happening in the global equity market - GAMESTOP (NYSE: GME). Sky rocket share prices that are not according to the fundamental of the company, but more towards a retail revenge towards hedge fund shorter that over-short GAMESTOP with more than 100% are putting hedge fund to brink of bankruptcy.

Welcome to the new era of trading. With so much money flushed into the capital market, gone are the days where hedge fund and IBs used to be controlling the market like how they used.

However, let's get back to business here, delivering my opinion and analysis towards this stock - MCLEAN 0167.

I have to tell you that I had this stock with me, I did mentioned about this stock for the past 2 months if you are following in my Telegram as well. But I am looking for the next 2 to 3 years with slew of interesting development that can happen to Mclean.

As I had mentioned in my previous posting, Mclean will be looking to see better revenue and profit starting 2021 due to new and increased orders from Thailand factory.

As you can see, the company involved in HDD works in Malaysia is just handful of company.

1. DUFU

2. JCY

3. Notion

4. Mclean

Let's dig deeper into all of them.

1. DUFU - Market leader, market cap RM 2 billion. Last 4 quarter cumulative revenue RM 291 million, trading at PE x40. Main focus all on HDD servives.

2. JCY - market cap RM 933 million. Last 4 quarter cumulative revenue RM  1.07 billion. trading at PE x 36. Will be diversifying into Automotive sector. HDD will reduce with 1 major customer heading for a stop on 2021 due to realignment of supply chain.

3. Notion - market cap 435 million. Last 4 quarter cumulative revenue RM 242 million. Trading PE x 70. Notion already been diversifying out from HDD business, and going more into Automotive. Currently Notion is also into gloves business.

4. Mclean - market cap 78 million. Last 4 quarter cumulative revenue RM 56 million. Smallest amongst all 4, and have the smallest share outstanding in current position, 197 millions share only.

Today, I am going to discuss about - JCY order reduction which eventually will span out to a total stop from 1 major customer. This below is the official announcement from JCY.

If you know well, JCY customer in HDD segment includes Western Digital as well as Seagate. Both are major customer. Since Seagate had redirect most sources into Thailand to make it the main production hub, there is a high level of assumption that the major customer mentioned could be Seagate? This is my assumption, alright?

Since it is a major customer, we could be possibly looking at it contributing at least 25% to 35% to JCY total revenue. Let's take an assumption of 30%, that could be looking into RM 300 million.

As you can see, at the other hand, Mclean is expecting more job at Thailand factory this year.

So I will run some numbers based on current situation assumption. Do not treat all the numbers as facts, as I do not have any real figures.

Assumption scenario

Mclean to see extra revenue of RM 200 million per annum. Benchmark on current DUFU operating net profit margin, it is 17%. I am not going to take 17%, but using 12% as net profit margin.

RM 200 million x 12% = RM 24 million.

RM 24 million / 197 million shares = 12 cents EPS

Based on PE x 40

Share price valuation will be  12 cents x 40 = RM 4.8

At RM 4.8 share price, market capitalization for Mclean will be RM 945 million.

Here is Mclean chart

This is Dufu chart (adjusted to bonus issue)

So if Mclean is really heading towards RM 4, I would say it will not be an immediate event. It will possibly takes 2 to 3 years or even 4 years to materialize. Can you hold on to your investment that long? That is a question you need to ask yourself.

IMPORTANT NOTICE

Please be informed, above are rough calculation of a normal person outlook. I am not a professional or certified analyst. Not a licensed consultant, just a normal retail investor. Please do not use my figures or data as a real referencing material. I am just sharing my thoughts of calculation, all truly based on assumption. This is not a buy sell trade reference material, please trade at your own risk or consult your own certified financial personnel.

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Mclean growth path is great with Thailand expansion

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If you are in my Telegram group, you would had noticed that I had been talking about Mclean Technologies Bhd for quite sometime. If you want to join the Telegram for FREE, yes, FREE, you can do so at https://t.me/targetinvest88

In fact, I had been talking on Mclean since the days it is trading below 20 cents. As I find this company very interesting on it's own way, the potential growth of this company opened up my eyes and mind as I compared to the peers of the industry, hence I would like to inform that I had vested interest in Mclean Technologies Bhd (MCLEAN - 0167).

Investing are tough nowadays, hence it is imperative to look for good companies to invest in growth that can burst up in a quick manner. 

While Mclean is a small company that most do not know yet, it is dealing with services such as cleanroom packaging and surface treatment such as precision washing for a few sector, namely oil and gas, HDD and other electronic goods.

One of the most exciting move that Mclean had taken 5 years ago is to venture to Thailand to be nearer to it's major customer Seagate.

Source

https://www.theedgemarkets.com/article/mclean-expects-earnings-recovery

Seagate expansion in Thailand from 2015 to 2020 valued at USD 470m CAPEX.

Source

https://www.reuters.com/article/us-thailand-seagate-technolo-idUSKBN0LE15720150210

Currently, Seagate owned global HDD market share 40%

What we are seeing here is could be another future technology gem riding along with global MNC growth.

According to the latest quarter report from MCLEAN, the company is expecting a improved revenue starting 2H 2021 with contribution from Thailand factory due to increase demand and orders.

Let's look at the matured player in the HDD industry scene

1. DUFU - market cap almost RM 2 billion

MCLEAN TECHNOLOGIES BHD

RM 68 million market cap

I believe that MCLEAN is on a good growth position by leveraging on the growth of Seagate, and also the proximity of MCLEAN with Seagate largest producing hub in South East Asia will definitely give MCLEAN a lot of better chances in the coming future.

At the current market capitalization of RM 68 million, there is just a huge growth in terms of market cap for Mclean, given competitor are sitting at RM 2 billion market cap (DUFU).

JCY RM 950 million

Notion RM 440 million

(Do note that JCY will be exiting HDD business and focus on Automotive, and Notion is also reducing on HDD business and focus on other)

So do you think Mclean will stay at market cap RM 68 million forever? With JCY and Notion exiting and reducing HDD orders, player in this industry will streamline to 2 player - Dufu and Mclean

How much is the potential for Mclean, let's talk about a 3 years time frame?  RM 500 million market cap? That will be above RM 2.

Stay tune for more news on Mclean with Target Invest.

-- I have to informed that I have vested interest in Mclean, and I am not a certified financial or stock analyst. Above view is just my expression for your reference study and this is not a buy sell trade call for Mclean. Kindly do your own due diligence and consult your own resources --

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MCLEAN TO BE RIDING HIGH ON VACCINE LOGISTIC CHAIN SUPPLY ?

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For 2020, the most happening trades in the share market would be gloves and vaccines related companies, and logistic company that is going to be involved in distribution of vaccines.

 

Gloves company, you know who they are. Vaccine related companies that had inked MOU for distribution or manufacturing will be those like BINTAI, SOLUTION, HWGB. But how will the MOU goes, or will it materialized, that is another question, but so far, the companies shares are goreng goreng.

 

Logistic transportation are also on the hype, such TASCO that provide cold chain transportation services. TNLOGIS are also in the mood.

 

However, one might be wondering, what about companies involved in BULK PACKAGING FOR TRANSPORTATION OF VACCINE? Any listed companies in Malaysia will be close to be doing that?

 

 

IF YOU ARE WONDERING WHICH COMPANY, LET ME SHOW YOU A POTENTIAL COMPANY LISTED IN KLSE THAT HAD THE CAPABILITIES TO PROVIDE BULK PACKAGING CONTAINER FOR VACCINE TRANSPORTATION.

 

This company is MCLEAN TECHNOLOGIES BHD (MCLEAN - 0167)

 

MCLEAN mainly provide few services

1. Services for HDD industry including assembly process, cleaning and washing.

2. Services for Surface treatment for HDD industry, semicon, printers and oil and gas.

3. Manufacturing of packaging products - all types of tray, plastic corrugated partition, and customized plastic pallet that can withstand up to 1000KG load.

 

Since this is about packaging, so we will talk about the packaging segment of MCLEAN.

 

 

Below is the example of an insulated plastic pallet shipper for vaccines and other medical products.

 

 

 

 

 

More dimension to see how this plastic pallet looks like

 

 

 

 

 

The above is China brand plastic pallet shippers for medical items, including vaccines.

 

 

So what about MCLEAN ?
 

MCLEAN ALSO DOING SIMILAR PRODUCTS IN MALAYSIA AT JOHOR.

 

 

 

Their product now is servicing the semiconductor industry packaging. Customer include KESM.

So here are the image of the products, can be customized to suit customer needs.

 

So, can MCLEAN ride big on this?

 

Malaysia minister say that they want Malaysia to be a vaccine manufacturing hub in South East Asia, probably this will be able to change the fortune of MCLEAN in the coming future.

 

Now MCLEAN share price still looking good, around 20 cents range.

 

 

I believe MCLEAN will be having positive changes in 3 to 6 months time.

 

This is not a buy / sell / trade call for MCLEAN. Only informed of the potential prospect for MCLEAN. Any investment or trading decision, please do your own due diligence.

 

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