Results preview Globetronics’ 2Q14 earnings likely to outperform, says MIDF Research

by **Cals** Fri 01 Aug 2014, 02:01

Results preview Globetronics’ 2Q14 earnings likely to outperform, says MIDF Research

Business & Markets 2014

Written by theedgemalaysia.com

Thursday, 31 July 2014 09:25

KUALA LUMPUR (July 31): MIDF Research has maintained its Buy rating on Globetronics Technology Bhd at RM4.70 with a higher target price of RM5.45 (from RM4.19) and said Globetronics’ 2Q14 earnings are likely to outperform when the company announces its 2Q14 results early next week.
In a note Thursday, the research house said it was expecting Globetronics’ 2Q14 earnings to be in the range of between RM16 million -RM18 million (compared with RM14.1 million in 1Q14).
“This will translate into a quarterly sequential earnings growth of at least +13.5% q-o-q.
“Our expectation is based on the assumption that there was a ramp-up in production activities from its three main product segments in 2Q14. These segments were sensors, LED and the timing and quartz crystal devices,” it said.
MIDF Research said that with better earnings prospects, there was a high likelihood that the company will be declaring higher dividends.
“As such, we are assuming higher dividend payouts for FY14 and FY15 of 21 sen and 23 sen respectively (from 19 sen and 19.5 sen previously).
“Following our revision, dividend yield for FY14 and FY15 would be in the range of 4-5% for both financial years,” it said.
Meanwhile, MIDF Research said Globetronics is unlikely to be involved in a ny merger or acquisition exercise in FY14, adding that due to the increase in business and production activities, the company will be focusing more on expanding the existing businesses.
“This is based on the rapid development and roll-outs of new and existing devices by its clients. Hence, we do not think that there will be any major M&A activities in FY14.
“Any major M&A activities will most likely to only happen in FY15. However, we do not think that any M&A activities will impede GTB’s ability to deliver consistent dividends,” it said.