Globetronics tumbles on earnings downgrade
PETALING JAYA: Shares of Globetronics Technology Bhd took a dive yesterday following an earnings downgrade by Maybank Investment Bank Research (Maybank IB).
The research house has slashed its profit estimates for Globetronics by 9%-13% for financial years 2017, 2018 and 2019, as the newly launched Apple smartphone does not feature the bundling of wireless earphones.
Globetronics makes gesture sensors, which are used in the making of wireless earphones.
It was earlier assumed that the new Apple smartphone would include the bundling of wireless earphones.
Maybank IB has downgraded its call on Globetronics to a “sell” and lowered its target price to RM5.80 from RM6.40.
“We had previously cautioned that consensus has been too optimistic in their estimates for the demand of gesture sensors, which may have assumed the bundling of wireless earphones for up to all three variants of the new smartphone.
“We believe this reality would likely translate to downgrades in forward earnings for Globetronics,” it said in a report.
Yesterday, Globetronics’ share price closed 3.5% or 23 sen lower to RM6.30.
Analysts had earlier estimated Globetronics’ earnings would be driven by the potential increase in demand for gesture sensors as Apple may bundle its wireless headphones for new smartphones.
According to a UOB KayHian report dated Sept 6, Globetronics’ capacity for gesture sensors was seven million units per month and the company has allocated about RM98mil for capacity expansion for the sensor segment.
It said Globetronics was the sole vendor for its end-client for the sensor segment.
Maybank IB has cut its volume estimates for Globetronics’ gesture sensor by 33%-40% for this year to 2019.
However, it expects that the impact would be cushioned by the higher sales of wireless earpieces from a likely introduction of the second-generation wireless earphones in 2018.
It said valuations of Globetronics’ shares were “expensive” at 20.7 times 2018 price earnings ratio, citing slower near-term growth.
“With the share price up 89% year-to-date, we believe the stock is ripe for profit taking,” it said.
For the first half ended June 30, Globetronics reported a 15% jump in net profit to RM11.73mil from RM10.2mil a year ago on the back of a slower sales growth of RM112.7mil from RM116.2mil previously.
Meanwhile, Hong Kong-listed Cowell e Holdings Inc – a maker of iPhone cameras that derives about 81% of its revenue from Apple, according to data compiled by Bloomberg – tumbled as much as 6.6%, while Taiwan’s Catcher Technology Co slid the most since November.
By INTAN FARHANA ZAINUL Wrong assumption: Research houses have slashed Globetronics’ profit estimates as the new iPhone X does not feature the bundling of wireless earphones. — AFP