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Wednesday, July 26, 2017

Globetronics results in line with expectations

Wednesday, 26 July 2017 | MYT 9:55 AM

KUALA LUMPUR: Globetronics Technology Bhd’s latest quarterly results have come in line with Affin Hwang Capital Research’s expectations.

“As anticipated, quarterly earnings momentum further improved into 2Q17. While 1H17 results accounted for 17% of our full-year forecast, we deem this inline, in anticipation of a stronger 2H17 upon full contribution of the light sensor,” Affin said.

Globetronics’ 2Q17 core net profit jumped 54% quarter-on-quarter (qoq) to RM8.1mil, its highest level over the past four quarters. Its growth was underpinned by higher production volumes in its sensor division, which contributed to the 26% qoq growth in revenue to RM63mil.

“We estimate that sensor volumes in 2Q17 were higher by 80% qoq with production of the gesture sensor near its installed capacity of 7 million units in late 2Q17 while the light sensor commenced mass production in May 2017 and there was an estimated 8 million units shipped in 2Q17.

“Nevertheless, with the associated start-up cost and low utilisation levels, 2Q17 Ebitda margin was impacted adversely, declining 0.5 percentage point qoq to 20.7%,” Affin said.
Overall, Affin said Globetronics’ 1H17 core earnings accounted for 17% and 22% of the house and street full-year estimates and broadly within expectations, due to an anticipated stronger 2H17.

Affin said production volumes for the light sensor were expected to reach 18 million units in July, 2.6 times June’s volume and should contribute to improved profitability in the coming quarter.

“Suffice to say, Globetronics’ performance has already improved significantly despite minimal contribution from the light sensor in 2Q17.

“We leave our forecasts unchanged and maintain our ‘buy’ rating and target price of RM8 (based on 20x 2018E EPS). Key risks to our call would be a loss of customers or on-going sensor projects that fail to be designed into current-year models,” Affin said.

Read more at http://www.thestar.com.my/business/business-news/2017/07/26/globetronics-results-in-line-with-expectations/#5tcASxtfcHEsgdG3.99

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