GTRONIC (7022) - Gtronic: High PE For A Good Reason
Globetronics FY15Q1 Financial Result
GTRONIC | FY15Q1 | FY14Q4 | FY14Q3 | FY14Q2 | FY14Q1 |
Revenue | 88.7 | 89.9 | 91.1 | 90.6 | 83.4 |
Gross Profit | 25.8 | 17.8 | 27.1 | 27.1 | 25.0 |
Gross% | 29.1 | 19.8 | 29.7 | 29.9 | 30.0 |
PBT | 20.4 | 16.6 | 21.8 | 20.8 | 17.0 |
PBT% | 23.0 | 18.5 | 23.9 | 23.0 | 20.4 |
PAT | 17.1 | 15.3 | 17.7 | 17.3 | 14.1 |
Total Equity | 280.4 | 284.6 | 298.3 | 291.4 | 272.4 |
Total Assets | 342.4 | 358.0 | 362.9 | 361.2 | 325.9 |
Trade Receivables | 68.4 | 73.7 | 65.9 | 70.3 | 60.6 |
Inventories | 15.0 | 19.0 | 15.2 | 13.4 | 11.1 |
Cash | 159.0 | 155.7 | 167.8 | 169.5 | 141.0 |
Total Liabilities | 62.1 | 73.4 | 64.6 | 69.8 | 53.5 |
Trade Payables | 17.2 | 33.5 | 16.3 | 17.2 | 9.9 |
Other Payables | 25.9 | 33.7 | 31.4 | 32.1 | 29.8 |
ST Borrowings | 14.8 | 1.7 | 8.1 | 11.5 | 9.9 |
LT Borrowings | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Net Cash Flow | 2.8 | 8.2 | 20.7 | 22.6 | -6.3 |
Operation | 12.4 | 81.6 | 52.4 | 34.5 | 13.2 |
Investment | -0.6 | -21.4 | -17.0 | -10.9 | -7.1 |
Financing | -8.9 | -52.0 | 14.7 | -1.0 | -12.3 |
Dividend paid | 22.5 | 61.8 | 30.9 | 19.6 | 19.6 |
EPS | 6.1 | 5.45 | 6.31 | 6.17 | 5.04 |
NAS | 1.00 | 1.01 | 1.06 | 1.04 | 0.97 |
D/E Ratio | net cash | net cash | net cash | net cash | net cash |
Gtronic's
FY15Q1 result is flat but profit margin "normalized" compared to
previous quarter. Bank borrowing increases as more capex is needed.
Apart from these, there is nothing more to comment on this set of financial result.
Boring is it? Not at all for me!
Gtronic's investors' eyes are on year 2016.
If
we look back at Gtronic's previous years' result, we can see that its
revenue and net profit especially, started to increase significantly
since year 2012.
What actually happened in year 2012?
In that year, Gtronic started to produce proximity sensor used in smartphones for a Swiss customer.
Tremendous growth of sensor revenue
We can see from the chart above how sensor business has contributed significantly to Gtronic's topline since 2012.
Will the growth continue beyond 2014?
Not only it certainly will, it is expected to grow by leaps and bounds, in which revenue from sensor division may double 2014's figure in year 2016!
How to achieve such an impressive growth?
Other
than proximity sensor which currently has 23mil monthly capacity,
Gtronic has started production for wearable sensors since end of 2014.
Capacity for wearable sensor has been ramped up from 3.5mil to 5.5mil/month now.
According to analyst, current average usage are at 20mil/month and 3.5mil/month for proximity and wearable sensors respectively.
So,
with new contribution from wearable sensors and slight expansion of its
timing device capacity (+10mil/month), Gtronic is expected to register
modest growth in FY2015.
It's not finished here.
Gtronic plans a capex as much as RM60-70mil for 2015-16. This tells how much its business can potentially grow.
Gtronic plans a capex as much as RM60-70mil for 2015-16. This tells how much its business can potentially grow.
It
plans to start production of a new product - imaging sensor (depth
sensor module) in Q4 of 2015 at 4-5mil/month. This sensor is used to
improve camera quality in smartphones and tablets.
Its
production is expected grow quickly to 20mil/month by Q1 of 2016, and
is expected to feature in a famous brand smartphone which is scheduled
to launch its latest model with major camera upgrade in Q3 of 2016.
The
volume of 20mil/month is almost similar to the volume of proximity
sensor. As the average selling price of this imaging sensor is
definitely higher than proximity sensor, contribution of imaging sensor
will surely exceed proximity sensor.
Each
smartphone will have only one proximity sensor and tablet without call
function may not have one. For imaging sensor, it can be used in front
and/or back cameras of smartphones and even tablets without call
function. So imaging sensor might have more volume compared to proximity
sensor.
RHB analyst predicts that imaging sensor can potentially generate revenue of RM180-250mil a year!
Forecast growth in sensor division
Gtronic's
Swiss customer is said to work on the improved 2nd generation of
proximity sensor. Base on their close business relationship, Gtronic
should be able to sustain or improve its revenue from proximity sensor
in the near term.
Besides,
Gtronic is said to be in talk with 2 potential new customers in Europe
& US which include co-development of multi-die health sensor module.
If successful, it will boost Gtronic's revenue and earning further.
According
to AllianceDBS report, Gtronic has only one single customer so far for
its sensor business which includes proximity sensor, wearable sensor and
upcoming imaging sensor.
So there is a single customer risk.
This
main customer is called "Swiss customer". We know that Inari has Avago,
but who is this Swiss customer, and who is the end-customer with a
famous smartphone brand?
This Swiss company is described as a pioneer and world leader in wafer-scale micro-optics.
From
net search, I think it is most probably Heptagon which is a Swiss
company who has a main office in Singapore, and the end-customer should
be the one with "A" which launched its wearable device recently.
Heptagon's role in a smartphone
Article below are press release from Heptagon in Feb14. Do you think it is related to Gtronic?
*****
Heptagon Announces Production-Ready 3D Array Camera for Smart Devices
First fully integrated 3D imaging system ready for mass production in smart phones, tablets and phablets
Singapore,
Feb 13 2014. – Heptagon (www.hptg.com), a leading provider of
intelligent micro systems for smart devices, today announced the general
availability of its TrueD H2 array camera, the first in a series of
advanced 3D imaging and depth sensing micro systems that Heptagon is
introducing to the market. The TrueD H2 camera has one of the smallest
form factors currently available for mass production.
Heptagon’s
TrueD H2 array camera captures additional short-range depth information
for gesture and user recognition, background removal, and enhanced
imaging. Its key features are typically used for front-facing smart
device cameras, but can also add value as an assisting camera to the
smart device’s primary camera.
The
TrueD H2 array camera is ultra-miniature, the result of integration of
its image sensor, module, optics, algorithms, and software. It is ideal
for devices where size is a key differentiator, or for emerging
applications such as 3D or immersive mobile video games, ‘augmented
reality’, and even the explosion of ‘selfies’ with more sophisticated
image manipulation and enhanced photography.
“Smart
device innovations continue at warp speed, transforming the ways people
interact with their devices. So, our challenge is to deliver micro
imaging and sensing systems for these devices with enhanced
capabilities, ultra high quality, ever-shrinking form factor and optimal
cost,” said Rene Kromhof, Heptagon’s vice president of sales and
marketing. “With the TrueD H2 array camera, we have proven our ability
to innovate rapidly and produce high-volume, market-ready solutions that
meet customers’ unique and demanding requirements.”
In
addition to enhanced depth mapping, exceptionally low z-height for
ultra-slim device design, superior color fidelity and low power
consumption, the TrueD H2 array camera leverages unique, patented focus
correction packaging (FCP) that accelerates low cost, high quality
production. FCP enables high-throughput, low cycle time module assembly,
without the need for active alignment systems or barrel-mount
solutions. In addition to faster line production, FCP also drives higher
yield and therefore lower overall unit costs – important benefits for
rapid, high volume manufacturing of smart devices.
“We
are extremely proud that our TrueD H2 array camera has already moved
from development stage into volume production,” said S.C. Leong,
Heptagon’s chief operating officer. “We appreciate the incredible
efforts our team and our partners have put into achieving this
milestone.”
The
TrueD H2 2x2 array camera is the result of more than three years of
development efforts from Heptagon. The 2014-15 pipeline will include new
array formats, lens enhancements, higher resolution, and additional
sensing system innovations. In addition, Heptagon has recently released
products that help to radically reduce the height and total footprint of
smart devices, including VCSEL based illuminators and some of the
world’s smallest IR emitters.
*****
No matter what, if everything goes well according to plan, year 2016 might be a wonderful year for Gtronic.
So, is current PE of 21x too high for Gtronic?
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