Analysts reaffirm conviction call on Globetronics
KUCHING: Following a recent visit to Globetronics Technology Bhd (Globetronics), analysts have reaffirmed their convction call on the group, a country top pick.
Affin Hwang Investment Bank Bhd (Affin Hwang), recently met up with management to track development of the company’s new light sensor.
“Management affirmed that the qualification process was underway and that Globetronics was already building the third evaluation model and expects sample builds to turn up in the mock-up smartphone by January 2017,” the research firm said.
Affin Hwang believed that there were higher chances for this product to materialise Globetronics’ previous imaging sensor) considering that the light sensor is a relatively less complex component and does not require the integration ( software and hardware) with other components within the device.
The research firm noted that management also guided that the second light sensor (for nonsmartphone related devices) is also on track for qualification by February 2017.
This, in the research firm’s view, makes sense, considering the three to three and a half month equipment order lead time and gradual ramp up before the end customer’s typical product launch in the third quarter (3Q).
According to Affin Hwang, Globetronics could also see further expansion of the group’s lightemitting diode (LED) division (26 per cent of the first nine months of 2016 (9M16) total revenue, versus 18 per cent in 2015).
It noted that currently, Globetronics is already providing wafer sawing and die-sort services for an infra red (IR) LED product for a Korean end customer, but undergoing qualification at a new customer.
“If this win were to materialise, it would positively contribute to the LED division,” Affin Hwang said.
The research firm added that the group’s other customer Soraa has also seen volumes jump 50 per cent year on year (y-o-y), albeit off a low base.
On the flip side, volumes for the proximity sensors have continued to shrink to two to three million units in December (from eight to nine million per month) although Affin Hwang was uncertain if these run rates were due to seasonal weakness.
“We leave our forecasts unchanged for now and remain optimistic that the new sensors will more than compensate for any slowdown in existing operations,” it said.
All in, Affin Hwang reaffirmed its ‘buy’ call and 12-month target price of RM4.88 per share based on a 2017E price earnings ratio (PER) of 18-fold.