KUALA LUMPUR: Affin Hwang Capital research has reaffirmed its buy call on Globetronics Technology Bhd with a higher target price of RM2.57 from RM2.55 previously.
In a note, the research house said despite weak results in 1Q19, it believes there will be earnings improvement moving forward.
It said while it expects 2019 revenue to be lower year-on-year, earnings should not be significantly impacted due to a favourable revenue mix.
Affin Hwang expects Globetronics to qualify several sensor and non-sensor products in 2H19 as an initiative to mitigate the possible contraction in the timing device segment.
"We remain confident that management will steer the company and once again develop a new revenue driver for the group, ensuring that its strong earnings growth profile is retained," it said.
In 1Q19, Globetronics' 1Q19 earnings were weak with nearly all key segments reporting a sluggish performance.
"The weakness in its sensor division was due to its light sensor product although its gesture sensor, which is designed into a wireless headset, has continued to be well received and production volumes remained robust.
"On the whole, we believe that sensor volumes will improve in the coming quarters due to seasonality," it said.
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