Globetronics Technology Bhd - Within Expectation |
Date: 31/10/2013
| Source | : | RHB | ||||||||
| Stock | : | GTRONIC | Price Target | : | 3.48 | | | Price Call | : | BUY | |
| Last Price | : | 3.05 | | | Upside/Downside | : |  +0.43 (14.10%) | ||||
Globetronics’ 9MFY13 results were within our expectations, with its MYR47.5m PBT accounting for about 77% of our FY13 target. Net profit was slight higher than expected on a lower effective tax rate. 9MFY13 net income rose 31% y-o-y on the back of a 19% y-o-y jump in revenue. EBIT margins improved to 18.8% from 17.6% in 9MFY12, underpinned by: i) economies of scale achieved across most of its product segments, ii) higher volume loadings from most of its customers, iii) improved productivity, and iv) better cost control. We have revised our EPS forecast by 1%/2% for FY13/14 by applying a lower effective tax rate. We have also derived a higher FV of MYR3.48, based on a higher target P/E of 15x. Our valuation is backed by its strong earnings growth, with its low 3 -year PEG of 0.43x, coupled with its consistent dividend payouts and a strong balance sheet.
Within expectation. 9MFY13 results were in line with our expectations, with its MYR47.5m PBT accounting for about 77% of our full-year target. Globetronics’ net earnings of MYR39.5m, however, were slightly above expectations due to a lower effective tax rate of 16.8%, partly contributed by the company’s 10-year pioneer status for its development of proximity sensors. 9M13 net profit climbed 31% y-o-y on the back of 19% increase in revenue to MYR242.3m. The better results were due to better performances across its business segments, with the exception of its integrated circuit (IC) business. 9M earnings would have been 55% higher y-o-y if we were to exclude the inclusion of a disposal gain of RM4.6m from its Jitra, Kedah plant in 9MFY12. 9MFY13 EBIT margins increased to 18.8% from 17.6% in 9MFY12 on the implementation of its costs control programme and productivity improvement measures.
Improved margins. Globetronics reported lower topline of MYR79.5m, down 7% q-o-q, which was mainly due to the shorter working days during the Hari Raya festivities and one of its IC customers in Singapore placing lower orders in 3Q. Nevertheless, its net profit of MYR15.2m was 7% higher q-o-q, which was due to improved margins and operational efficiency.
Vivid prospects ahead. Despite being in a cyclical technology industry, the company has proved itself by posting uninterrupted profitability over the past 10 years. Its management has demonstrated its ability to transform the Globetronics into a diversified producer of LEDs, quartz crystals, timing devices and sensor products that are widely used in the fast-growing smartphone and tablet industry from just a pure IC manufacturer. Going forward, we remain upbeat its growth prospects. We are expecting a 3-year earnings growth CAGR of 23.6%, boosted by contributions from all business segments (LED components, timing and quartz crystal devices, proximity sensors and optical interface sensors) , with the exception of its IC business.
Maintain BUY, MYR3.48 FV. We are factoring a lower effective tax rate into our forecasts. EPS has been revised upward by 1%/2% for FY13F/14F. We have also derived a higher FV of MYR3.48 (from MYR3.00), based on a higher target P/E of 15x, which is still below its peak P/E of 19.2x in 2010. Our valuation is premised on its strong earnings growth, with its low 3-year PEG of 0.43x, coupled with consistent dividend payouts and a strong balance sheet. The company has further enhanced its net cash position with a total net cash of MYR144m (net cash per share of 52.4 sen per share) in 3Q13 vs MYR131m, or net cash per share of 47.7 sen in 2QFY13. We maintain our BUY recommendation.
Source: RHB
Comments
Post a Comment