Globetronics' Q1 results below expectations as Affin Hwang cuts target price

Globetronics' Q1 results below expectations as Affin Hwang cuts target price

Affin Hwang cuts Globetronics' financial year 2022 (FY22)-FY24 earnings per share (EPS) forecast by 14-18 per cent.

KUALA LUMPUR: Globetronics Technology Bhd's first quarter (Q1) results came below expectations in view of potentially weaker demand for its customer's products ahead, Affin Hwang Capital said.

Affin Hwang said during Q1, the sensor segment which accounted for 62 per cent of revenue saw a 12 per cent quarter-on-quarter (Q-o-Q) decline in revenue.

"This was largely due to a contraction in the light sensor volumes while the gesture sensors, which are used in the wireless earbuds, saw some improvement QoQ.

"Overall, being the highest revenue and profit contributing segment, this also resulted in a 3.6 percentage points (pps) Q-o-Q decline in earnings before interest, taxes, depreciation and amortisation margin to 35.2 per cent," it said in a note today.

The firm cut Globetronics' financial year 2022 (FY22)-FY24 earnings per share (EPS) forecast by 14-18 per cent.

Affin Hwang said amid investor expectations of higher interest rates ahead, the sector had seen a significant correction in price earnings (PE) valuations year to date.

 "As a result, we think that there is relatively better opportunities in the sector and with better earnings growth profiles over the near term, especially after an anticipated sensor design win has been push back," it added.

Affin Hwang has downgraded Globetronics to "Hold" from "Buy" previously with a lower target price of RM1.47 from RM2.01.

https://www.nst.com.my/business/2022/04/792161/globetronics-q1-results-below-expectations-affin-hwang-cuts-target-price