Maybank IB Research said Globetronics' near-term outlook appears murkier, raising concerns on earnings visibility.
PETALING JAYA: Globetronics Technology Bhd
’s outlook for the second half of this year (H2 17) is expected to be strong driven by the recovery in its sensor division, according to Maybank IB Research.
The research house on Wednesday said despite a weak first quarter 2017 (Q117), it was comforted by a strong H2 17 outlook by its sole sensor client, Ams AG, driven by significant order backlog (EUR196mil) and sizeable capex investments (EUR400mil-450mil).
Maybank IB, which is maintaining its hold call on the stock with a higher target price of RM4.87, said it was slightly raising its FY17-19 earnings forecasts by 2% per annum to account for a higher US$/ringgit forex of 4.30 (from 4.20).
It was also now pegging Globetronics at 16.5 times CY18 price-to-earnings ratio (PER) (from 14 times ) in line with Inari Amerton Bhd’s (sector bellwether) PER target for its strong earnings growth over FY17-18.
For the first quarter ended March 31, Globetronics reported a net profit of RM4.67mil compared with RM3.68mil a year ago.
Revenue for the period was lower at RM49.8mil against RM58.7mil previously.
The improvement in earnings was largely due to lower foreign-exchange losses during the quarter.
The lower revenue achieved in the period was mainly due to a reduction in end-customer demand.
The brokerage, however, added that consensus was divided especially for FY18, where earnings forecasts range widely from RM54mil to RM113mil.
The key variance lies in the volume forecast for Globetronics’ gesture sensor where there is no agreement on how many variants of the upcoming premium smartphone would be bundled with the wireless earphones which carry one gesture sensor on each side.
“We see downside risk as the North American smart devices brand has been actively managing component costs in order to preserve margins. As such,
"We maintain our forecasts which assume only the high-end variant (which would make up about36% of smartphone sales by the North American brand in 2018) to be bundled with wireless earphones, it noted.
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