Globetronics earnings forecast remains positive

KUALA LUMPUR: Maybank IB Research has cut its target price for Globetronics Technology Bhd to RM2.44 from RM2.80 after revising its earnings forecast for the company.

This followed after Globetronics’ earnings for the third quarter ended Sept 30, 2021 (Q3’21) came in lower than expected on lower volume loading for its gesture sensor products and the gradual winding-down of its quartz crystal and timing devices (QCTD) business.

Maybank IB Research noted Globetronics has decided to restructure its QCTD segment with its operational lines in Kuala Lumpur for a key Japan-based customer slated to end production in November.

Its net profit fell 9.8% to RM16.27mil for the Q3’21 compared to RM18.03mil a year ago.

“Year-on-year, however, revenue and earnings dragged due to lower volume loading for its gesture sensor product line and the gradual cessation of its QCTD business for a key customer,” it added.

The research house has lowered its financial year ending Dec 31, 2021 (FY21), FY22 and FY23 earnings forecasts for Globetronics by 16%, 15% and 12% respectively.

However, it is keeping a keeping a “buy” call on Globetronics with a revised target price of RM2.44 pegged to an unchanged price-to-earnings ratio of 29 times for FY22 estimate.

Maybank IB Research is upbeat on the group’s prospects in the long run supported by its sensor segment and LED.

The research house believes that the group’s sensor segment would benefit from the upcoming holiday season splurge on newly launched mobile devices.

It added that the group would also see a pick-up in the LED segment as electrical vehicles penetration in developed countries continue to gather pace.

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