AMINVESTMENT Bank maintained its hold call on Globetronics Technology (GTB) and fair value of RM2.39 per share, pegged to an FY21F PE of 24x due to the continued strength in smart sensors and expectation of demand growth.
GTB is principally involved in the production of smart sensors, quartz crystal timing devices (QCTD), the assembly and water processing and die sorting of solid-state lighting (SSL)/LED components and production of integrated circuits (ICs) and small outline components.
According to a report by AmInvestment Bank, GTB’s key investment merits lies in its new generation smart sensors that are expected to see continued growth and the ramping up of laser automotive headlamps being a key focus in FY21.
The company is also planning to diversify its customer range and enhance revenue opportunities arising from the US-China trade war amid ongoing negotiations.
All these factors are being considered for AmInvestment Bank’s decision of maintaining its hold call.
However, GTB’s recent second quarter ended June 30, 2020 (2Q20) showed that the company had a slight but still-healthy decline in profits to RM5.02 mil from its previous RM8.1 mil in 2Q19 and a revenue of RM44.9 mil against 2Q19’s RM47 mil.
The decline was mainly impacted by the movement control order (MCO) that limited production capacity while also seeing lower volume loadings and supply chain adjustments from customers.
Despite that, AmInvestment Bank is expecting GTB’s 2H20 results to improve, which is mainly based on better volume loadings anticipated for smart sensors, while other businesses continue to show normalisation.
“We like GTB for its strength in smart sensors with the new generation sensors’ demand expected to drive growth,” it said in an Oct 12 note.
“But we remain cautious on a key risk, which is the decline in end demand for consumer electronics affecting the sensor division outlook due to the worsening Covid-19 impact,” it added. – Oct 14, 2020
