KUALA LUMPUR: Maybank Investment Bank Research has maintained its “buy” rating on Globetronics Technology Bhd
as it raises its earnings forecasts due to strong growth prospects and stronger US dollar.
The research house had on Monday raised the net profit forecasts for FY Dec 31, 2015 to 2017 by 5% per year.
Maybank Research raised its assumption of US dollar to ringgit exchange rate to 3.85 from 3.6 previously. At midday, the ringgit was at 4.4010 to the greenback.
“Our sensitivity analysis reveals a 1% impact on Globetronics’ earnings for every 1% change in our US$/ringgit base case assumption, ceteris paribus. There is upside risk to our forecasts, operationally and from a currency perspective.”
Following that, Maybank Research raised Globetronic’s target price by 5% to RM7.35, pegged on an unchanged 17 times 2016 price-to-earnings ratio.
The stock offers a decent 4% dividend yield, it added.
The brokerage also noted that despite recent cuts in global semiconductor growth forecasts, the semiconductor player had yet to see any demand slowdown in its sensors division and quartz crystal and timing devices (QCTD) division.
“The former continues to receive new orders due to the adoption of new sensors into the next generation smartphone, the latter continues to see further outsourcing from its client, Epson.”
It estimated the two divisions would contribute 76% of FY15 revenue.
On the other hand, it expected sales from the light emitting diode and small outline integrated circuit divisions to contract by 10% to 15% per year.
The sensors division will anchor growth in FY16, rising to about 60% of FY16 revenue from 43% in FY15 with the introduction of the new high-volume 3D-imaging sensor, the research arm added.
Two sensors will be used in every smart device in order to power 3D-imaging.
“While test production of the 3D imaging sensor has been pushed back slightly to Nov 2015 (from Oct 2015 initially), full-scale production (more than 30 million units per month) is still on schedule to begin by the end of the first quarter of 2016.”
The research house said Globetronics management has guided that the company would spend a total of RM45mil to RM50mil in capex in FY15/16.
The higher capex was to bring total capacity of the 3D-imaging sensor to 40 million units per month and for an introduction of a new sensor product in late-FY16 or early-FY17.
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