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Tuesday, September 26, 2017

Globetronics should see strong earnings recovery in Q3

Tuesday, 26 Sep 20178:43 AM MYT

KUALA LUMPUR: The production ramp-up of Globetronics Technology Bhd
's light sensors and gesture sensors should lead to strong recovery in earnings starting in Q3 2017, says AllianceDBS Research.

The research house remains maintains its Buy recommendation with unchanged target price of RM7.65 based on 18x FY18 EPS.

"Besides light sensors and gesture sensors, we believe GTB could also secure design wins for new sensors in 2018 (particularly 3D imaging sensor), driving further growth and upside to our FY18 forecasts," it said.

AllianceDBS Research believes consensus has yet to fully factor in the higher volume for light sensors, especially in FY18-19.

"Consensus might also be conservative on gesture sensors volume because there is no announcement of bundling. We believe the volume for gesture sensors will continue to rise as bundling is just a matter of time for the bottlenecks in the supply chain to be resolved.

"GTB’s share price performance is likely to track smartphone sales by the North-American customer in the near term. We expect more newsflows to only emerge from the supply chain in 1H2018, which would then drive expectations of new sensors win by GTB in 2018, particularly the 3D imaging sensor for rear cameras."

Key risks includethat Globetronics only has one customer for its sensor division and that sensor products are supplied to a single end-customer currently. However, AllianceDBS Research notes that the relationship with the client is strong.


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