PETALING JAYA: The commercialisation of new products should set the stage for a stronger 2021 for semiconductor-related company Globetronics Technology Bhd.
UOBKayHian said in a report to clients that the company’s new generation of sensors will be qualified starting from end of 2020.
“Additionally, further impetus could come from the introduction of a new sensor, for which the group is working with a same major customer with commercialisation to take place in the next two quarters.
“We have yet to factor this in our earnings estimates, “ said the research house.
Globetronics is also likely to ride on the opportunities that the US-China trade war offers.
This together with its strength in smart sensors and a ramp-up in laser automotive headlamps production to boost its LED segment will offer the group customer diversification and enhanced revenue, AmInvestment Bank said in its report.
“Meanwhile, the group is working on co-developing next generation sensors for its customers for 2021 adoption which was reactivated after being delayed by lockdowns and border closures for about one quarter, ” it told clients in the report after meeting the company’s management recently.
On new business platforms, it said qualification of the group’s bio-environment/gas sensor is ongoing with mass production aimed for first quarter of next year and a target revenue contribution of 5% to 6% for financial year 2021 (FY21).
Its customer diversification efforts are also in progress with projects being in discussion with potential new sensor customers following the US-China trade war.
“The group has been selective with its new business new business platforms, aiming for more sustainable and long-term business with lesser dependency on labour-intensive processes, “ AmInvestment said.
It added that the group’s laser light headlamp production was impacted by inconsistent raw material supply, ie, wafer supply from California, which had been affected by Covid-19 restrictions due to the high number of cases.
“The group aims for normalisation of supply by December but the laser lighting business is expected to still be a key focus for FY21.”
Separately, it said Globetronics is also looking to expand its Penang factory space by an additional 30,000 sq ft for roughly RM9mil, increasing its existing floor space by 12.5%.
Although generally positive on the company, AmInvestment feels that all its positive prospects have been fairly valued.
“Key risks for the stock include a decline in end demand for consumer electronics affecting the sensor division outlook, and prolonged supply chain disruptions due to the worsening Covid-19 impact.”
Globetronics last traded at RM2.92 per share, valuing the entire company at around RM1.96bil.
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