Business News

Monday, 16 November 2015

Boost from sensors

Group chief executive officer Datuk Heng Huck Lee told StarBiz that the group was on course to achieve another record year.  “The fourth quarter is a generally weaker period in comparison with the third quarter because demand tends to soften. However, the secured orders in hand so far for delivery in the fourth quarter are sufficient to offset a period that generally sees the demand for semiconductor chips and sensors softening,” he said. (File picture shows Heng inspecting operations at the plant. - The Star/Goh Gaik Lee)

Group chief executive officer Datuk Heng Huck Lee told StarBiz that the group was on course to achieve another record year. “The fourth quarter is a generally weaker period in comparison with the third quarter because demand tends to soften. However, the secured orders in hand so far for delivery in the fourth quarter are sufficient to offset a period that generally sees the demand for semiconductor chips and sensors softening,” he said. (File picture shows Heng inspecting operations at the plant. - The Star/Goh Gaik Lee)

GEORGE TOWN: Globetronics Technology Bhd, which is one of the beneficiaries of the rise in “smart products” is looking to finish the year with a new record backed by its involvement in several projects to produce smart sensors that kicked off five months ago.

So far the group’s results for nine months have already surpassed that of the corresponding period last year.

For the final quarter which is generally weak, the company is seeing strong orders and the jobs are spilling over into the first quarter next year.

Group chief executive officer Datuk Heng Huck Lee told StarBiz that the group was on course to achieve another record year.

“The fourth quarter is a generally weaker period in comparison with the third quarter because demand tends to soften. However, the secured orders in hand so far for delivery in the fourth quarter are sufficient to offset a period that generally sees the demand for semiconductor chips and sensors softening,” he said.

“Based on that, we are confident of ending the year with a new record,” said Heng.

He added that the group was now taking orders for the first quarter of 2016.

Globetronics’ customised Internet of Things (IoT) and health sensors are among the key projects that had spearheaded the group’s growth so far.

“We are finalising the capital expenditure for 2016 for at least three new sensor products for smart device manufacturers in Europe, US and Asia. The commercial production for new sensors will kick off in mid-2016,” Heng said.

For the nine months of the 2015 fiscal year ended Sept 30, the group posted RM55.5mil in net profit on the back of RM266.4mil turnover, compared to RM49mil and RM265mil achieved in the previous corresponding period.

Last year, the group posted RM64mil in net profit on the back of RM355mil turnover.

Heng said the smart device industry was expected to see a soft first quarter next year. In the last three years, there was growth in the first quarter. Generally demand tapers off in the fourth quarter and is weak in the first quarter.

The projection is in line with the expectation of research firm Gartner that forecast the global semiconductor capital spending next year to decline 3.3% compared to this year. For 2015, the global semiconductor capital spending is expected to be US$63.9bil.

There are two reasons for the projected decline in 2016, according to Heng.

The first is because the next generation of smart devices are not yet available in the market.

“Major and non-major brand names are making improvements for their respective smart devices now.

“Until the new features are out for the next generation smartphones, the growth for the smart device segment would decline or remain stagnant.

“Without the new features, consumers can’t justify changing their handsets as such devices are more expensive due to the sliding Asian currencies,” said Heng.

The second reason is the stronger US dollar that has made it more expensive for Asian consumers.

Heng said the group had in hand two prototype sensors to be used in mobile medical devices for its Asian and European customers.

“We had collaborated with them on the development. These two sensor products, now being fine-tuned to meet medical certification requirements, are expected to be produced in mid-2016 after their trial run,” he said.

These two sensor products reflect the group’s initial success and progress to establish a foothold in the IOT market, which is in line with the federal government’s IOT blueprint to spur local participation in the segment, according to Heng.

Heng said most of the semiconductor and semiconductor test equipment companies supplying to the smart device segment in the country were expected to do well in 2015 due to the weakened ringgit and improved manufacturing processes which had enhanced their competitive edge in the market.

Tags / Keywords: Stocks , Earnings , Commodities , Corporate News , Investing , Globetronics

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