Globetronics
Update 26 June 2012
No signs of
demand slowdown so far despite Europe
sovereign problem.
Existing
Business
-
LED
volume loading orders from OSRAM but reducing exposure to Cree as client facing
stiff competition from Korean players. This division remains highest margins as
no material exposure just a sawing and sorting service.
-
Demand
for crystal timing devices also growing and capitalizing on its earlier
capacity ramp up to 110m units/mth this year.
New
product line – Proximity sensor
-
Operates
a cost plus model for its Swiss client who is the IP holder, supplying a
SMARTPHONE market leader.
-
Current
production of 8m units/mth reaching 20m by July to be ready for product launch
by Sept.
-
Currently
the sole external supplier of this product to the Swiss client as other
European supplier has since shutdown.
-
Possibility
of turnkey operator still being considered. +ve added advantage of 10% to bottom
line, -ve exposure to raw mat prices and inventory.
-
Developing
new optical sensor that could be in commercial production by year end.
Others
-
Current
strong cash flow will allow the company to fully pay off its term loan used for
working capital by July.
-
EPF
still seen reducing stake, currently down to around 7% with LTH 8%.
Results
- 2Q
numbers due out on July 24. Previous qtr 1Q MAR 2012 Turnover -15%
RM56.8m
Net -3.5%
RM6.2m EPS 2.31sen. 2Q guidance around (from growth factors mentioned
above) RM8.5m ie 1H of RM14.7m net or 5.4sen, annualized PE 10.8x , 7.2% yield.
Full year numbers however should edge closer to RM34m net with sensor
contribution kicking in from the 2H, giving us a PE of 9.3x with a yield of
8.5%.
BUY
as best proxy for SMARTPHONE/TABLET growth exposure.