The research house remains bullish on the stock, which it says is undervalued following the recent price correction.
"We maintain our BUY recommendation on Globetronics Technology (GTB) with unchanged fair value of RM2.84/share, pegged to an FY22F PE of 24x.
"We have tweaked our FY21F and FY23F forecasts by +1% and -3% respectively to account for slight changes in volume assumptions for the group’s different product segments while FY22F forecasts remain unchanged," it said in an update.
The research house has a positive outlook on the stock given Globetronics' strength in smart sensors with new generation sensor demand expected to drive growth.
It also takes into consideration a ramp-up in laser automative headlamps as well as potential opportunities from the US-China trade war, which could lead to customer diversification and revenue enhancement.
Globetronics' 1QFY21 core profit of RM11mil was 16% higher year-on-year due to higher volume loadings for smart sensors and quartz crystal timing devices.
However, core profit fell 31% quarter-on-quarter on lower volume loadings leading to smaller economies of scale mainly due to seasonality of sensor product volumes.
Moving forward, Globetronics' key sensor segment is expected to see overall soft volume loading for the next quarter.
Light sensor volumes are expected to fall 15% at about 21 million units monthly while gesture sensor volume are expected to drop to 27 million units.
Volume for its motion sensor and QCTD products are expected to remain stable.
"GTB’s power lighting products have thus far seen slight improvements in volume loading and are still expected to be one of the group’s key focus for FY21.
"Note that volume loadings for GTB’s sensor segment will be seasonally stronger in 2H of the year," said AmInvestment.