Hot Stock Globetronics rises 4.5% on target price upgrade, firmer outlook

by **Cals** Thu 19 Mar 2015, 01:30

Hot Stock
Globetronics rises 4.5% on target price upgrade, firmer outlook
By Shalini Kumar / theedgemarkets.com | March 18, 2015 : 11:23 AM MYT

KUALA LUMPUR: Globetronics Technology Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) rose 4.5% in early trades this morning, after Affin Hwang Capital Research upgraded its target price for the stock.
The research house upped its target price to RM6.58 from RM5.31 previously and is maintaining its 'buy' call.
At 10.57 am, Globetronics (fundamental: 3.00; valuation: 2.10) was trading 26 sen or 5.3% higher at RM5.16, with 975,000 shares done. The counter was one of the top gainers across the bourse.
Apart from the raised target price, Affin Hwang is also raising its 2016 earnings per share estimates by 18% to account for the group's expected mass production of its imaging sensors in 2016.
In his note, analyst Kevin Low said Globetronics' sensor business was expected to grow 45% y-o-y in 2015 on robust demand for proximity sensors, rising contributions from wearable sensors and marginal contributions from imaging sensors.
"By 2016, we estimate that a significant portion, or 57% of group revenue, will be derived from this area (2014: 32%).
"The sensor business is lucrative, and as the products replace older products reaching end-of-life status, we expect Globetronics’s EBITDA margins to remain healthy at about 29% despite cost pressures," he said.
He also noted that Globetronics has a three year forward compounded annual growth rate (CAGR) estimate of 25% and expected strong 2015-17 dividend yields of 5-8%.
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)