Wednesday, August 7, 2013

Globetronics : Solid quarter (DBSV)

BUY RM2.60
KLCI : 1,795.08
Price Target : 12-Month RM 3.50
Solid quarter

• 2Q13 net profit of RM14m was within expectation
• Earnings were lifted by higher loading volume and margins
• Net cash grew 21% q-o-q to RM0.47/share by end 2Q13
• Maintain BUY rating and RM3.50 TP, supported by FY13-15F net yields of 5-8%

Results in line. 2Q13 net profit grew 46% y-o-y to RM14.1m, on the back of RM85.5m revenue (+23% y-o-y). This takes 1H13 net profit to RM24.3m, which is 47% of our full-year profit. We expect stronger 2H13 earnings.
3Q has been the strongest quarter since FY09 while there will also be higher contributions from new temperature compensated frequency devices. For the quarter, the better y-o-y and q-o-q performance was largely supported by higher loading volume from most of  Globetronics’ customers, better economies of scale, and bettercost control. These lifted 2Q13 EBIT margin to 18.4% (vs. 2Q12: 16.5%) and PBT margin to 19.3% (vs. 2Q12: 17.4%). Generally, its newer products such as LED and proximity sensors have better margins as compared to its traditional products such as IC. Meanwhile, net cash rose 20.5% q-o-q to RM0.47/share at end 2Q13.

Our View
Strong FY13F earnings. 2H13 earnings should remain strong, and drive FY13 earnings growth (+22% y-o-y). This would be supported by healthy loading volumes for its key products such as proximity sensors, LED and temperature compensated devices.

Maintain BUY. Our TP is intact at RM3.50, pegged to 15x FY14F EPS. At ex-cash PE of 9x for FY14F, valuation is still cheap (below +1SD of mean) considering its 3-year EPS CAGR of 20% on the back of improving ROEs of 19-24%. Globetronics’ near term key catalysts are better earnings contribution from sensor products (proximity, optical interface) and gaining new major customers. The stock continues to be supported by favourable FY13-15F net DPS of 14-20 sen, which translate into 5-8% net yields.

Source/Extract/Excerpts/来源/转贴/摘录: DBS Vickers Research
Publish date: 31/07/13

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