Light sensor division to lift Globetronics’ financial performance

KUCHING: Globetronics Technology Bhd’s (Globetronics) real catalyst lies in the recent qualification of the group’s light sensor, Affin Hwang Investment Bank Bhd’s research arm (Affin Hwang) observes.

It also noted that equipment is already trickling in for this, in anticipation of a full ramp-up by May.

According to Affin Hwang, Globetronics’ chief executive officer ( CEO) was recently quoted as saying that capital expenditure (capex) for 2017 would reach RM85 million compared to the research firm’s recently upward revised capex assumption of RM65 million.

“In that recent press article, the CEO talked about the mass production of two new sensors for the smart healthcare wearable device and automotive lighting,” it noted.

While the capex was larger than expected, Affin Hwang was not really surprised over the new products given that the company had

In that recent press article, the CEO talked about the mass production of two new sensors for the smart healthcare wearable device and automotive lighting. Affin Hwang

already been undergoing qualification for several new products.

Although the research firm viewed this positively, contribution from a wearable device will likely not be as significant as a smartphone as it thought that the qualification for the automotive lighting could still take a while.

“Separately, we understand that the production forecast for the gesture sensor is set to rise to eight million units per month by June or July (currently four million units per month) and the company may need to spend another RM20 million to raise its current capacity of seven million units per month,” Affin Hwang said.

The research firm estimated a four per cent enhancement to 2017E earnings per share ( EPS) once this happens.

Meanwhile, for the light sensor, the research firm noted that one of the two products has been given the green light and qualified.

Overall, Affin Hwang left its capex assumption unchanged for now pending the issue of the purchase order for the new equipment.

Affin Hwang’s ‘ buy’ call is reaffirmed as the qualification and production milestones for the gesture and light sensor are being achieved, and thus could serve as a positive catalyst for the stock.

The research firm’s target price was also unchanged at RM5.75 per share, based on a 2017E price earnings ratio ( PER) of 21-fold.

Globetronics’ real catalyst lies in the recent qualification of the group’s light sensor while the equipment is already trickling in for this, in anticipation of a full ramp-up by May, analysts say.