Sensors to boost Globetronics Q4 results

PETALING JAYA: Sensor products are expected to further boost Globetronics Technology Bhd’s results for its upcoming fourth quarter ending Dec 31, according to UOB Kay Hian Research.

The research house said the technology company reported strong core net profit of RM14.4mil in the third quarter on higher loading volume for sensor products, namely light sensors that had just started mass production in June.

However, it said the third quarter results were below expectations as margin expansion on better economies-of-scale and better product mix was smaller than expected on startup costs that was incurred during the quarter.

“Having said that, Globetronics is poised to achieve better quarter-on-quarter earnings in the fourth quarter due to further incremental production volume on sensor products,” the research house said.

It noted that strong revenue growth was largely led by the rampup in production volume for light sensors, and to a much smaller extent, higher production volume for gesture sensors in the third quarter.

“The light sensor’s monthly production volume was only at eight million units when it started mass production in June, and has progressively ramped up to 11 million units in July, 21 million units in August and 30 million units in September,” it said.

“Meanwhile, monthly production volume of gesture sensors also increased from five million units in June to seven million units in JulySeptember,” it added.

UOB Kay Hian maintained its “buy” call on the stock with a target price of RM7.50.

Meanwhile, Maybank IB Research said in its report that it was fully priced in noting that nine months cumulative core net profit is still below expectations at just 50%/45% of its and consensus’ financial year 2017’s forecasts due to lower-than-expected sensor average selling prices.

Glovetronics closed 19 sen lower at RM6.40 yesterday.