Friday 21 Jun 2024
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KUALA LUMPUR (May 10): Shares of Globetronics Technology Bhd [KL:GTRONIC] surged on Friday as analysts project a promising outlook for the group's earnings in the second half of the financial year 2024 (2HFY2024), despite first quarter performance below consensus expectations. 

Globetronics’ stock rose by as much as five sen or 4.13% to RM1.26, marking its largest single-day gain since April 24. As of 10.30am, the stock was trading at RM1.24, still up by 2.48% after 4.94 million shares exchanged hands. In contrast, the country’s benchmark index FBM KLCI was only 0.04% higher.

At RM1.24, Globetronics’ market capitalisation stood at RM837.09 million. The shares of the outsourced semiconductor assembly and testing (OSAT) player have declined by 21.88% since the beginning of the year, but otherwise have gained 23.76% over the past year.

Globetronics' net profit for 1QFY2024 accounted for only 15% of the consensus full-year forecast, and "earnings are expected to continue underperforming in 1HFY2024", Maybank Investment Bank (Maybank IB) said.  

"With demand unlikely to undergo a near-term pick-up amidst inflationary pressures and stiff competition in the premium segment of the wearables market, GTB’s outlook remains challenging," Maybank IB said. 

However, the research house anticipates that “volume loading numbers will pick up in 2HFY2024 from a low base, along with the introduction of next-gen sensors for the upcoming smartphone product cycle”.

Analysts covering Globetronics have all remained cautious with the majority, six out of nine, have "hold" calls, while the remaining three recommend "sell". The consensus 12-month target price is RM1.19.

On Thursday, Globetronics reported to Bursa Malaysia that its net profit for 1QFY2024 jumped 73.42% year-on-year (y-o-y) to RM5.72 million, up from RM3.3 million in the same period last year. This increase was attributed to a foreign exchange (forex) gain and higher interest income.

The company recorded a forex gain of RM1.8 million during the quarter, compared with a forex loss of RM65,000 previously. Interest income was RM1.3 million, up from RM900,000 previously.

However, revenue slipped 9.74% to RM29.9 million from RM33.13 million in 1QFY2023, due to lower volumes of products sold to some of its customers.

MIDF Amanah, which upgraded the stock to "neutral" from "sell", foresees limited downside risk for Globetronics but anticipates a better outlook for the group in 2HFY2024. It noted Grolobetronics is set to benefit from the ‘China +1’ and ‘Taiwan + 1’ strategy. 

“In the near term, management hinted that the volume loadings for the group’s main business segment, ie, the sensor business, remain weak. However, this should pick up in 2HFY2024 in view of new customer and product development,” it added.

Edited BySurin Murugiah
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