KUALA LUMPUR: Globetronics Technology Bhd
's sensor volumes will improve in the coming months as production gears up for this year's model launch, says Affin Hwang Capital research.
"Higher installed capacity for both the light and gesture sensors will be the key driver of Globe’s 2019E 23% EPS growth," it said.
The research house said new product introduction in 2H19 and higher production volumes for its automotive laser headlamp segment would be a key re-rating catalyst.
It maintained its buy call on the counter with a target price of RM2.55.
In Globetronics' recently announced earnings, 1Q19 results were seasonally weaker, falling 80% quarter-on-quarter (q-o-q) and 74% year-on-year (y-o-y).
"Globe’s 1Q19 core profit of RM4m was 80% lower compared to 4Q18, largely impacted by a combination of softer demand for its sensors due to seasonality and lower volumes for its timing device business," it said.
Affin Hwang said there is a strategic decision to gradually exit from the latter business, which would see further contractions in the years ahead.
In the sensor segment, production volume declines have become the norm post-Christmas holiday season, it said.
However gesture sensor volumes have remained robust due to increasing demand for its end customers' wireless headphone sets.
"We understand that installed capacity for gesture sensors will further increase in April and again by midyear.
"Light sensor volumes are projected to recover only by mid-year, once production commences for this year’s model launch," said Affin Hwang.
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