YiStock Research

Author: YiStock   |   Latest post: Wed, 11 Jul 2018, 11:13 AM


Gtronic - Q3 2018 Q Result. 2 years Target Price Raised to RM 4.50 - (3) (Edited) - YiStock

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9th Nov 2018 Update:

Apple new Ipad Pro is finally goes on sale!

Below i attach ipad quarterly sales chart from this link: https://www.statista.com/statistics/269915/global-apple-ipad-sales-since-q3-2010/

2018 Total Unit Sold: 43.5 million

2018 Q4: 9.67 mil

2018 Q3: 11.55 mil

2018 Q2: 9.11 mil

2018 Q1: 13.17 mil

2017 Total unit Sold: 43.8 million

2017 Q4: 10.33 mil

2017 Q3: 11.42 mil

2017 Q2: 8.92 mil

2017 Q1: 13.08

Key observation:

Apple sold averagely 10 mil units of Ipad for every quarter for the past 2 years. We shall see additional 10 mil units of light sensor added into Gtronic capacity? This is a 20% increase!

Let see and cheers!


Updated 1 Nov 2018

On 30th Oct 2018, Gtronic released a set of stunning quarter result. The result is expected to be very good simply because Gtronic main customer, AMS AG released the result much earlier. You may like to refer this link: https://klse.i3investor.com/blogs/YiStock/179294.jsp

Sadly to say, the market is currently going through the October-Effect or else today Gtronic should breach RM 3.00 mark. Anyway, the value of the share will always reflected in the price when market return stable.


If you are a reader of mine, you should have read about my 1st and 2nd article.  https://klse.i3investor.com/blogs/YiStock/161967.jsp


AS of today, the business prospect of Gtronic on Face ID has gained even better momentum after the project winning by AMS from android based phones Xiao Mi and Huawei.

In this article, i would like to address the issue of flattish revenue of latest Gtronic quarter result. Certainly, as usual, i will make a lot of guestimation on the future prospect of Gtronic.

Below Key Revenue & Profit up to Q3 2018:


    Revenue Profit  
2018 Q4      
  Q3 87,704 23,604  
  Q2 71,527 9,341  
  Q1 86,486 15,188  
  Total 245,717 48,133  
2017 Q4 104,790 25,039  
  Q3 87,014 14,379  
  Q2 62,922 7,062  
  Q1 49,832 4,667  
  Total 304,558 51,147  
2016 Q4 46,734 6,367  
  Q3 52,462 9,153  
  Q2 57,409 6,522  
  Q1 58,741 3,679  
  Total 215,346 25,721  
2015 Q4 77,224 15,742  
  Q3 88,707 20,490  
  Q2 89,030 17,933  
  Q1 88,695 17,149  
  Total 343,656 71,314  


Key Observation:

1) Superb Profit Growth

2) Rather Flat Revenue


Below comment given by various analysts: http://www.orientaldaily.com.my/s/265820

According to the news, ( i have not personally read the actual report as i do not have one, therefore, all argument i made is based on the news link, and the link may be wrong!)

(1) UOBKH Analyst highlighted the flattish revenue and high profit margin are due to the lower production of promixity sensor and higher volume of light sensor. And Gtronic production may be weak until 2019 2H. They cut target price to 2.30.

(2) Maybank "worried" AMS guidance on profit margin will affect Gtronic.

(3) Affin among the bullish one still.

(4) MIDF say gtronic depends too much on few  customers, with 4% DY, it is not attractive.

(5) Alliance "worried" trade war will affect market sentiment.


Personally, i think is fair everybody hold different opinion. However, i'm particularly keen to study the opinion.

Let kick start with UOBKH analyst's view of lower proximity sensor and production will be low till before 2H 2019.

Normally, one of the key indicator for investors to keep track on semiconductor company performance is the "Inventory" carrying amount.

2018 Q4  
  Q3 13,507
  Q2 13,212
  Q1 12,254
2017 Q4  13,464
  Q3  17,360
  Q2 11,607
  Q1 10,447
2016 Q4 8,995
  Q3 7,353
  Q2 7,496
  Q1 12,135
2015 Q4 17,867
  Q3 12,960
  Q2 14,675
  Q1 14,977

If you have notice Gtronic's inventory level, it has been rather flat too for the past 4 quarters. A noticeable jump was back in Q3 2017 when Gtronic started the mass production for light sensor. (please take note inventory level include also work in progress and finished goods). That high inventory level has subsequently gave away a very good quarter of Q4 2017. Thereafter. the inventory has stabilised.  So doest the revenue.

In april 2018, an interview has been on air from BFM. https://klse.i3investor.com/blogs/bfm_podcast/155071.jsp

From the interview (pay attention to minute 6.00 to 7.00), Gtronic highlighted that they have adopted a new strategy where the company do not want to expose to the raw material risk! Therefore, in 2018,  the raw material is supply direct by customer, not purchase by Gtronic. 

So, with the new strategy of no raw material exposure, i think is fair for us to relook into Gtronic "cost of goods sold" trend. As since the raw material for light sensor is no longer a factor into the cost, will the revenue stay rather flat but profit and profit margin still increases? 

Refer below The COGS & Profit Before Tax Margin Trend of Gtronic for past 3 years. Followed to this schedule is the CAPEX.

    Revenue COGS COGS (%)   PBT  %  
  Q3 Simulation          105,132            70,196           66.70%              24,942           23.72%  
2018 Q4                                   *face ID std volume 40 m                          light sensor
  Q3 87,704 52,768 60.17%

*face ID std volume 40 m

24,942 28.44% light sensor
  Q2 71,527 51,734 72.33%   10,865 15.19% light sensor
  Q1 86,486 59,438 68.73% *face ID mid volume 21 m 16,743 19.36% light sensor
  Total 245,717            
2017 Q4 104,790 70,196 66.99% *face ID upper volume 39 m 25,156 23.89% light sensor
  Q3 87,014 61,945 71.19% *face ID mid volume  21 m 16,062 18.46% light sensor
  Q2 62,922 46,329 73.63% *face ID lower volume 8 m 8,467 13.46%  
  Q1 49,832 36,517 73.28%   6,188 12.42%  
  Total 304,558            
2016 Q4 46,734 35,552 76.07%   8,713 18.64%  
  Q3 52,462 37,145 70.80%   10,439 19.89%  
  Q2 57,409 40,872 71.19%   8,577 14.94%  
  Q1 58,741 41,578 70.78%   5,719 9.74%  
  Total 215,346            
2015 Q4 77,224 53,471 69.24%   18,288 23.68%  
  Q3 88,707 61,979 69.87%   22,171 24.99%  
  Q2 89,030 62,438 70.13%   20,772 23.33%  
  Q1 88,695 62,878 70.89%   17,046 19.21%  
  Total 343,656            


2018 Q4  
  Q3 23,833
  Q2 4,530
  Q1 2,716
2017 Q4 11,872
  Q3 (peak) 49,883
  Q2 39,470
  Q1 5,399
  Total 106,624

Key Interpretation from Capex Schedule:

(1) Gtronic light sensor capacity has expanded in Q2 2017 and peaked in Q3 2017 and final small expansion in Q4 2017 . No significant capax from Q1 2018 onward. i.e. the capacity for face ID llight sensor has been fixed at 40 mil unit per month. I further classified 40 mil as standard volume, 20 mil is mid volume, 30 mil is upper volume , 10 mil is lower volume.

(Please note that UOBKH research analysts put 40 mil per month is correct!!! The capacity offer great flexibility and fast response time. I have got the correct number from Annual report).



Key interpretation from the COGS & PBT margin trend Schedule:

(1) From 2016 Q1 till 2017 Q2 (a total of 6 quarters without face Id light sensor), the percentage of Gtronic's COGS is running at a very close range of 72.63%. 

(2) In Q3 2017 & Q1 2018When face Id light sensor running at mid volume , the COGS average at 70.18%

(3) In Q4 2017, when face Id light sensor running at standard volume (top volume), the COGS dropped to 66.99% and PBT margin raised to 23.89%

(4) In Q2 2018 (without face ID), the COGS jump back to 72.33%

Now, come to Q3 2018,

(5) In Q3 2018 when face ID running at standard volume (top volume), the reported COGS has dropped to only 60.17% compared to 66.99% reported in Q4 2017.  Does the drop in COGS really due to higher margin of light sensor?

I did a simulation based on the assumption of Gtronic running light sensor at top volume 40 mil unit, as well as using the COGS number of Q4 2017 when Gtronic running at top volume. 

How the simulation works: I used the COGS Q4 2017 minus COGS Q3 2018, the differential sum is the raw material change (in dollar value) that provided by Gtronic customer. Therefore, it gives the number RM 17,428,000. 

I then added this sum into Gtronic Q3 2018 Revenue and COGS, it gives the simulation number as per show in red in the above schedule. Please note that such simulation will not result in the PBT change.

The result is surprisingly matching. The Q3 2018' COGS is now at 66.70% and PBT margin is now at 23.72% matching the Q4 2017.


Conclusion: From the above COGS trend, i doubt  the drop in Gtronic Revenue in Q3 2018 is really due to the weakening of proximity sensor. I further doubt the higher margin is due to better light sensor margin. I found them actually remain the same. 


Have a look on below table on Revenue. Forecast has been inserted based on Kuo Ming Chi & Past year iphone x quarterly unit sold. Apple launched new iphones in mid-Sept 18. According to Kuo Ming Chi, Q3 18+ Q4 18 = 78 mil to 83 mil combined total are to be shipped out in 2H 2018.

I forecasted Gtronic to have very stable volume loading pattern quarter to quarter.  therefore we will not see a big jump in Gtronic Q4 result. It should be more or less same like Q3 18. Unless the ipad pro with Face ID kicks in.

Revenue  South East Asia       PBT
Q3 19 Forecast             [All iphone 46.36 mil units - average last 3 FY]  
Q2 19 Forecast             [All iphone 40.9 mil units -average last 3 FY]  
Q1 19 Forecast             [All new iphone 55 mil to 60 mil units -Kuo M-C]  
Q4 18 Forecast             [Iphone Xr 36 mil - 38 mil units - Kuo M-C]  
Q3 18 83,407                [iphone XS/XSMax 42mil - 45 mil units -Kuo M-C]   23,232
Q2 18 67,233                [Iphone XS/Xs Max small volume]     9,666
Q1 18 82,157 iphone X (21 mil) [UOBKH]   15,607
Q4 17 99,373 iphone X (32 mil) [UOBKH]   23,064
Q3 17 82,585 iphone X (21 mil) [UOBKH]   14,115
Q2 17 58,399 iphone X (8 mil)   [UOBKH]     6,631
Q1 17 45,512     4,608

Key Observation:

Obviously Apple will prefer to place order with Gtronic only after they have certain booking numbers from Pre-Order for every model they put on sales. Gtronic 40 mil units light sensors per month capacity offers great flexibility and fast response time. 



How i view Gtronic and Why i'm Bullish

(1) Face Id is now a standard feature of smart devices

Apple 1st lauched face ID into Iphone X in 2017 fall, the result is encouranging and the estimated numbers of Iphone X production is 80 mil unit for all Iphone X.  

In 2018, Face Id has become a standard feature of all new launch Iphone (Iphone Xr, Xs, Xs Max, Ipad pro). It is no longer one off kind of feature.

Obviously, no supplier willing to expand the capacity if that feature is not going to be standard feature for the next few years.

According to Ming-Chi Kuo, the estimated volume of 2018 new launches is about 150 mil units and Apple sold around 216 mil units iphones ANNUALLY & 44 mil units of Ipad in 2017. Plus and minus.


(2) Volume Loading consistency

While we do see seasonal in Apple Iphone number sold, Gtronic is unlikely to follow exactly. Light Sensor is now a standard features in all new iphone. 


(3) IPHONE Global Shipment Drop, Really?


What a Big Title!!! Global smartphone shipment down 6% in Q3 2018...Apple kena Whack!!!

Well, becareful on what you read. See below. The drop is in Samsung. Not Iphone, Huawei or Xiaomi.

Image result for iphone unit sold

Iphone Sold (mil) FY19 FY18 FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10
Q1 (Sept - Dec)           77.3 78.29 74.78 74.47 51.03 47.79 37.04 16.24 8.74
Q2   52.2 50.76 51.19 61.17 43.72 37.43 35.06 18.65 8.75
Q3   41.3 41.03 40.4 47.53 35.20 31.24 26.03 20.34 8.4
Q4   46.89 (latest) 46.68 45.5 48.05 39.27 33.8 26.91 17.07 14.1

Key observation:

(1) The numbers tell me iphone shipment is grow a slower % from FY 18 compared to FY 17 & FY 16. I don't know why people say apple is doing badly.

(2) Notice the Iphone experience a good jump from Green column 2G + 3G to Yellow column 4G. Coming FY 19, we shall see 5G. Are we going to see a big jump in numbers of iphone sold? I'm think we stand a good chance.

(3) Is face Id going to be face out next year? I'm pretty sure it will not. It going to stay for next few years i guess.

(4) What if ipone shipment reall drop? in 2017, Gtronic supplied approximately 80 mil unit for iphone X (that make it has only 2 quarter of high loading in Q3 & Q4 17), now to supply 150 mil to 200 mil unit per year. This is more than 100% jump in units. If Iphone units drop 5 % from 217 mil units, Apple still going to sell 206 mil unit, do you think the number is still good for Gtronic? Obviously is still good number . Or you worried the 5% and abandon the 95%?

(5) Do not forget Ipad Pro with another 40 mil units annually.



(1) I hope this article offer different opinion and helps you too. Please bear in mind, i'm making very very bold assumption, as usual.

(2) Since Gtronic is now part of the important supply chain to Apple. And because Face ID is now a standard feature for Iphone and Gtronic capacity stood at 40 mil per month with flexibility of producing up to 120 mil units light sensor per quarter. I think is much safer for me to estimate the TTM profit of RM 100 mil profit. That gives an EPS of 15 sen per share.

(3) While we do not know of the project win by AMS from Xiao mi & huawei will benefit Gtronic or not. We shall wait for more guidance from Gtronic. Any good news will be bonuses. Any spike in earning in any coming quarter will be good news.

(4) The projection has not include the new laser headlamp project that start production in Oct 2018. I have noticed Capex of RM 23.8 mil in Q3 2018.

(5) The excitement maybe coming from the health devices. I will explain in coming quarters.

(6) 5G in 2019, will there be Iphone super cycle?

My target price? With highest PE of 25 to 30, i give my Gtronic target price of RM 3.75 (2019) to RM 4.50 (2020) under normal market condition. 




Note: none of the articles written by me in the past, present and future offer buy or sell call, is just some kopi-o research. Please take note.

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GTRONIC 1.77 0.00 (0.00%)

  Be the first to like this.
Flintstones I scare. YiStock stock picks are high hanging fruits to me
01/11/2018 12:56 PM
trulyinvest Too good to be true
01/11/2018 1:37 PM
YiStock flintstones, wish me good luck then, as always. cheers!
01/11/2018 1:50 PM
Bruce88 For that target, the profit must touch 100m..
01/11/2018 5:22 PM
Tee Tom I just afraid the valuation is not as high as previous partly due to trump statement that called Apple move its assembly factory to American. This may affected the Apple supply chain also if it really happen. Investor do not like uncertainty, we can see the share price start to react to trump statement. And we know it is extremely difficult to move Apple assembly site back to American as the supply chain is very mature in China and Asia region. But who know the silly president will do next?
01/11/2018 11:25 PM
YiStock I think is fair to focus on things that we can control.i.e. numbers. Things beyond control i.e. market fear, should not hinder the decision making process. It make the decision in-efficient.
02/11/2018 9:40 AM
value88 Two things i noticed about Globtronics are :
I) Globetronics used to have bad 1H and good 2H, so earnings would fluctuate wildly.
ii) Its stock price movement also not aligned with quarterly earnings...one can notice that before Q2's bad earnings result, its stock price rose, and after Q2's bad earnings result was announced, its stock price rose further. Conversely, before Q3's good earnings result, its stock price declined, and after Q3's good earnings result was announced, its stock price declined further..
02/11/2018 1:18 PM
value88 For the investor/trader who put bet by forecasting subsequent quarter's earnings (i.e. buy if expect next Q's earnings is good, and sell if expect next Q's earnings is bad), Globetronics would be a nightmare to them because one would not make money from Globtronics using this approach.
02/11/2018 1:21 PM
value88 The next Q4 will also be good. Thus, its stock price will not perform ?
Let's see how it turns out..
Anyway, assuming next Q's core EPS is same as this Q3, Globtronics is selling at 22x PE multiple now, which is not cheap.
02/11/2018 1:22 PM
7210 You have to use forward EPS to calc. PE, because gtronic is a growth stock.
02/11/2018 3:12 PM
YiStock https://www.ped30.com/2018/11/05/nikkei-xr-production/
06/11/2018 1:14 PM
YiStock https://forums.appleinsider.com/discussion/203871
06/11/2018 1:15 PM
YiStock Prospects

We are excited at our prospects for FY2018 and beyond. The adoption of our light sensors into the new smart devices would be seeing a more pronounced contribution, as compared to only about six months of strong loading in FY2017. This alone would provide us with a very strong foundation base for the upcoming year.
09/11/2018 11:21 AM
ray1980 Everything is change in short time,all new information n situation need recalculate against to make sure the answer can match the share performance now."Add oil"!...
16/11/2018 10:59 PM
ray1980 And we can saw the share price closed 2.10 today.Mr Market gave the response for the share price on bad global business situation now n next year.
16/11/2018 11:12 PM
ray1980 Anyway,u r work hard guy,"Add oil"!...
16/11/2018 11:16 PM
TopAnalysis Can i know why ipad pro got to do with gtronic? It sell at 7 nov mean the face recognition thing is done before 7 nov what to do with future?
19/11/2018 10:17 PM



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