Its sensor production volume in the first half was three times higher than the same period last year, driven by higher gesture sensor volumes and contribution from the light sensors.
KUALA LUMPUR: Affin Hwang Capital Research believes that Globetronics Technology Bhd
will lkely face weaker sensor volumes in 1Q18 and bottom out in 2Q18 due to soft demand for its US customers' smartphones.
However, it does not expect a repeat of 2016 when earnings collapsed following dwindling sensor volumes.
The research firm maintained a buy call on the counter but with a lower target price of RM6.16 based on an unchanged 2018E price-earnings of 20x.
"On a positive note, Globe’s sensor customer is guiding for even
stronger light sensor volumes in 2H18, which should compensate for some of
the slack in 1H18.
"Moreover, volumes of Globe’s other sensors – gesture, proximity and motion sensors for wearable products – are holding up well and should soften the blow of the weaker light sensor volumes (>60% of sensor production volume)."
The research firm said it expects production volumes for the overall sensor business to contract 16% and 29% quarter on quarter for 1Q18 and 2Q18 respectively, before a recovery in the second half of the year.
Affin Hwang Research revised its average forecast for the monthly production of sensors to 47 million units from 56 million units previously.
While this represents a 16% downward revision, it is still a 74% growth over 2017 production.
"Our 2018-20E EPS are cut by 23%/4%/5% respectively to account for the change in the light sensor volume forecasts, depreciation charges and a revision in our
RM/US$ assumption."
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