DUFU CHART: TIME TO ACCUMUALTE AS TECHNICAL READING ARE GROSSLY OVERSOLD

Recommendation: ACCUMULATE%D�urrent Price: RM0.55%D�-month Technical Target: RM0.73%

Catalysts: Playing catch-up against the bigger HDD players and riding on the bullish HDD outlook

Dufu, a laggard in recent rally
The Penang-based company has withstood many cycles profitably in its 22-year history, a testament to its resilience and cost%D�ontrol efforts. Its future growth will centre on newly acquired Futron Technology since 1Q09, whose plant in China will be able to%D�ater for larger orders and at lower costs.%D�espite its strong earnings growth and low valuations, DUFU’s shares have been a laggard during the recent rally, possibly due to its smaller market capitalization and free float, limited range of products, lower dividend yield and weaker EPS CAGR from FY09-%D�Y11 against its peers. As a results, its share price only increased 0.9% (industry: 7.5%), 15.8% (industry: 30%) and 3.8% on a 1-month, 2-month and 3-month basis, respectively.

Poised for a breakout after completing its triangle consolidation
Since hitting a 52-week high of RM0.73 on 12 Jan 2010, DUFU’s share price has been trapped in a triangle consolidation. As trend%D�nd momentum indicators are gradually heading upwards, we are optimistic that DUFU’s share prices will nudge higher as current%D�onsolidation is likely at its tail end. We are eyeing the RM0.60 level (50% FR from top RM0.73 and low of RM0.46) as theimmediate upside target, followed by the RM0.63 (61.8% FR), RM0.67 (76.4% FR) and 52-week high of RM0.73.

On the downside immediate support is at the RM0.54 level (50-day SMA), followed by RM0.52 (23.6%FR) level and RM0.505 (100-%D�ay SMA). Our cut-loss point is pegged at the RM0.50 psychological support level

Recommendation: ACCUMULATE%D�t RM0.55, DUFU is trading at 4.7x FY11 P/E (industry 7.1x) and 0.6x FY11 P/B (industry 2.1x), respectively. We expect the huge%D�7% P/E and 71% P/B discounts to the industry to narrow as DUFU gradually plays catch-up with its peers. Our 6-month technical target price for DUFU is RM0.73, implying a 0.8x FY11 P/B.

Share price is poised for a breakout above the downtrend line once the triangle consolidation completed.

dufutechnology.com/