Quick take: Globetronics Q3 earnings send stocks lower

KUALA LUMPUR: Shares in Globetronics Technology Bhd fell more than 2% in early market trading Wednesday after announcing a 19% drop in its earnings in the third quarter ended Sept 30.

The semiconductor counter, the third top losers on Bursa Malaysia, shed 3.18%, or seven sen to RM2.13 with 1.12 shares done.

Globetronics announced that its net profit fell 19.74% to RM18.94mil in the third quarter ended Sept 30,2019 (3QFY19), from RM23.6mil in the same period last year, due to “lower volume loadings of products from certain customers in the group”.

Its earnings per share fell to 2.83 sen from 3.54 sen in 3QFY18. Revenue for the quarter was down 24.45% at RM66.26mil against RM87.7mil last year.

In the first nine months, Globetronics posted a net profit of RM30.18mil, 37.3% lower than the net profit of RM48.13mil recorded at the same period a year ago.

Its revenue was 36% lower at RM157.36mil, from RM245.71mil previously.

Looking ahead, the group said it expected a strong recovery in its overall business and volume loadings in the second half of 2019.

MIDF Research said all in, Globetronics’s 9M19 financial performance came in within the house but below consensus expectations, accounting for 60.0% and 52.9% of full year FY19 earnings estimates respectively.

“We are revising our target price to RM1.82 (previously RM1.47). While we keep our FY19 and FY20 earnings estimates unchanged, we are increasing the group’s terminal growth to 4.5% from 4% previously.

“We view that the revision in the terminal growth corresponds with the positive development surrounding the US-China trade war as well as the group’s effort to diversify away from the smartphone market, ” the research house said, adding that it is maintaining its sell recommendation on the counter.

Source: TheStar