"Our target PE multiple is in line with market-cap weighted average of local peer OSAT (outsourced assembly and test) players’ forward PE of 24 times," it said.
The research house expects Globetronics to register net profits of RM50mil, RM67mil and RM72mil respectively in FY20F–FY22F, representing earnings growth of 11%, 34% and 8% y-o-y respectively.
Globetronics' recent 2QFY20 performance was impacted by the movement control order (MCO) and pandemic, which limited production capacity and resulted in lower volume loadings and supply chain adjustments from customers.
"However, 2HFY20 is expected to improve mainly based on better volume loadings anticipated for smart sensors, while other businesses continue to show normalization," said AmInvestment.
It added that it is cautious over a decline in end demand for consumer electronics affecting the sensor division outlook, due to the worsening impact of Covid-19.
Globetronics is principally involved in the production of smart sensors, quartz crystal timing devices (QCTD), assembly and wafer processing and die sorting of solid state lighting (SSL) / LED components, and production of integrated circuits (ICs) and small outline components.
According to Aminvestment, its key investment merits are new generation smart sensors, a ramp-up in laser automotive headlamps and customer diversification and revenue enhancement opportunities arising from the US-China trade war.
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