Globetronics Technology Bhd -
Another Good Set Of Results
Globetronics’ 1HFY13 results were within our expectations, with net profit of MYR24.3m accounting for about 48% of our FY13F target. Y-o-y, 1HFY13 net income surged 53% on the back of a 29% y-o-y jump in revenue. EBIT margin improved to 16.9% from 14.7% in 1HFY12, underpinned by a better product mix, economies of scale achieved across most of its product segments and higher volume loadings from most of its customers. As at end-June, the Company is in a net cash position, with net cash per share of MYR0.48. We leave our forecasts unchanged, but lift our dividend payout projection to MYR0.16 (FY13F) and MYR0.18 (FY14F), which translates into decent dividend yields of 6.2% and 6.9% respectively. Maintain BUY with a FV of MYR3.00, pegged to a higher target P/E of 13.0x.
1HFY13 net profit surged >50% – in line. 1HFY13 results were in line with our expectations, with net earnings of MYR24.3m accounting for about 48% of our full-year target. 1HFY13 net profit surged 53% y-o-y from MYR15.9m in 1HFY12, on the back of MYR162.8m in revenue – a 29% increase y-o-y. The higher bottomline was largely due to margin improvement; EBIT margin increased to 16.9% in 1HFY13 from 14.7% in 1HFY12 as a result of a shift in product mix to higher margin products. Globetronics’ 1HFY13 effective tax rate of 15.7% was also lower than 1HFY12’s 18.4%, which was partly contributed by the Company’s 10-year pioneer status for its development of proximity sensors.
Better q-o-q results on higher volume loadings. Globetronics reported strong q-o-q results, with revenue of MYR85.5m (+23% y-o-y; +10% q-o-q) and net income of MYR14.1m (+46% y-o-y; +39% q-o-q). This was primarily due to higher volume loadings from its key clients. The Company managed to increase its production of timing and quartz devices at its Sungai Way plant to about 110m-120m units per month from about 60m units per month in FY12. Nevertheless, we are expecting a set of flat q-o-q results in 3QFY13, largely due to shorter working days in August as a result of the Hari Raya festivities and other holidays.
Bright prospect ahead. Going forward, we are upbeat on contributions from its timing and quartz crystal devices segment, LED components and sensors manufacturing. These three segments contributed to over 80% of its total sales in 1HFY13. Globetronics has been ramping up its production to cater for higher orders. Its timing and quarts devices production capacity has been ramped up to close to 134m units per month in June from about 120m units per month in 1QFY13. The Company is also targeting to produce 450m-460m dies per month to cater to orders from its main customer – Osram. In addition, it has been granted a 10-year pioneer status for the development of its proximity sensors and is also trying to obtain grant income from the Malaysian Investment Development Authority (MIDA).
Maintain BUY, RM3.00 FV. We are leaving our forecast unchanged, but are lifting our dividend payout projection. The company has been distributing attractive dividends given its favourable net cash position. The Company has further enhanced its balance sheet with no borrowings and a total cash pile of MYR131.0m (net cash per share of MYR0.48). We are expecting a total dividend of MYR0.16 and MYR0.18 for FY13F and FY14F respectively on the back of the stronger earnings visibility. These will translate into a dividend yield of 6.2% and 6.9% respectively. All in, we maintain our BUY call, with a higher FV of RM3.00, pegged to a higher target P/E of 13.0x against previous P/E of 12x. We deem the targeted P/E of 13x is fair which is slightly above its 5-year average P/E of 12x. Earnings growth is strong against its current valuation as 3-year P/E-to-growth (PEG) remained low at 0.4x.
Publish date: 31/07/13