Supply-chain disruption, external factors weigh on Globetronics’ near-term prospects
KUCHING: Analysts are cautious on Globetronics Technology Bhd’s (Globetronics) prospects due to the ongoing supply chain disruptions and other external factors.
In a report, the research team at AmInvestment Bank Bhd (AmInvestment) said: “Growth for the group’s key sensor segment, which historically contributed more than 60 per cent of the group’s revenue, is expected to remain soft until the first half of the financial year 2022 (1HFY22) as key customers are still caught in the ongoing supply chain disruptions.”
It further noted that its Southeast Asian revenue, which contributed 97 per cent to the group’s 1QFY22, declined 22 per cent year-on-year (y-o-y) to RM41 million.
“This is due to Globetronics’ continuing to be impacted by lower volume loadings from its key customers in the sensor business,” it added.
Globetronics’ 1QFY22 core profit declined 45 per cent quarter-on-quarter (q-o-q) to RM9 million as lower volume loadings from key customers further affected Globetronics’ quarterly performance.
“Evidently, we see an apparent diseconomy of scale reflected in its 1QFY22 earnings before interest, tax, depreciation and amortisation (EBITDA) margin, which was cut by 10 per cent points q-o-q to 36 per cent,” the research team said.
Meanwhile, the research team at RHB Investment Bank Bhd (RHB Research) noted that the volume loadings for both the gesture and lights sensors should improve marginally to circa 25 million to 26 million into 2Q from 21 million 23 million currently.
It also pointed out that further volume improvements are expected for laser light headlamp products amid the easing of disruptions, with additional products in the pipeline. The new generation of gesture and light sensors are now targeted for May to June. Other new projects in the pipeline include the specialised light-emitting diode (LED) lighting business.
The 30,000 sq ft floor space expansion is also expected to be completed in May while a total estimated capex is budgeted at RM45 million to RM50 million.
“Earnings should improve in the quarters ahead, in tandem with the ramp-up of a major smartphone brand,” the research team opined.
All in, RHB Investment maintained its ‘neutral’ view on the stock while AmInvestment downgraded its call to ‘hold’ from ‘buy’.