Globetronics to gain from 5G and IoT prevalence

PETALING JAYA: Globetronics Technology Bhd’s ability to improve its relevance in high-tech sensor products is seen as a critical factor in spearheading the group’s growth.

According to UOB Kay Hian (UOBKH) Research, the electronics manufacturing services company stands to benefit from 5G, the Internet of Things or IoT, and vertical cavity surface-emitting lasers deployment thanks to the growing relevance of the technologies in high-end smartphones.

“Mass production of new-generation light and gesture sensors with enhanced functionality, alongside new sensors for various applications could drive sales volumes,” UOBKH Research said on its outlook for Globetronics.

“In the long-term, we remain hopeful of the group’s ability to improve its relevance in high-tech sensor products for various applications, which would continue to spearhead earnings growth,” the brokerage wrote in its recent report.

UOBKH Research recently downgraded Globetronics to “hold”, with a lower target price of RM1 from RM1.50 previously, after a disappointing performance by the company for the first quarter ended March 31, 2023 (1Q23).

Globetronics’ shares were last traded at RM1.04, down six sen, or 5.45%, on Wednesday. Year-to-date, the counter is down by about 10%.

For 1Q23, Globetronics’ net profit tumbled 65% to RM3.3mil from RM9.45mil a year ago.

It reported an earnings per share of 0.49 sen against 1.41 sen in the year prior.

Revenue for the quarter fell 23% to RM33.13mil compared with RM42.8mil in the corresponding quarter last year.

According to UOBKH Research, the second quarter would likely remain underwhelming for Globetronics amid the ongoing inventory adjustment by its key customers.

“For 2Q23, we gather that the production of light sensors and motion could be flat at 20 million to 21 million per month and 4.5 million per month, respectively, on average based on current visibility,” the brokerage said.

“Similarly for gesture sensors, we expect monthly volume loadings to remain at 14 million per month amid the ongoing inventory adjustment.

“As for quartz crystal timing devices, volume loadings are expected to drop further,” said the research house.

Meanwhile, UOBKH Research noted Globetronics’ new business development, driven by demand from multinational corporations (MNCs), is expected to pick up in the second half of this year when the semiconductor cycle recovers.

It pointed out that Globetronics had freed up capacity from low-margin quartz crystal timing devices, alongside an upcoming build-up of 30,000 sq ft of floor space to take on new business from its MNC customers.The group is creating a business portfolio that integrates its new generation sensors with light-emitting diodes, laser and optical devices, which will be done via collaboration with several partners in 2023.

The brokerage also noted that Globetronics had also RM10mil in a clean room facility at its Bayan Lepas plant in Penang, which had facilitated mass production since the second half of last year, with meaningful earnings to come in by the second half of 2023.

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