KUALA LUMPUR (Sept 10): Globetronics Technology Bhd (KL:GTRONIC) on Tuesday saw a steep sell-off that has dragged its new substantial shareholder APB Resources Bhd (KL:APB) into a paper loss of RM102 million since it bought into the outsourced semiconductor assembly and test firm in February.

Globetronics' shares, which were actively traded on Tuesday, fell 26 sen or 32.5% to close at 54 sen after announcing that its external auditor KPMG PLT had resigned "on a voluntary basis".

Intraday short-selling of the counter was suspended. Globetronics was the most active counter across Bursa Malaysia, with 86.78 million shares traded, more than 20 times its 65-day average of 4.4 million shares.

Shares of APB, which owns a 10.36% stake in Globetronics, also fell by six sen or 4.41%. Meanwhile, the Bursa Malaysia Technology Index slipped 0.37%, and the Bursa Malaysia Small Cap Index was down 0.55%.

In a statement after market close, Globetronics said KPMG's voluntary resignation as auditors of the company was in line with the group's "new strategic direction, influenced by newly emerged shareholders and management."

"We extend our gratitude to KPMG for their long service and look forward to maintaining a positive relationship as we transition. It is important to note that the financial reports so far have not been audited by KPMG for this year, ensuring there is no impact on our financial integrity from this transition," Globetronics said.

KPMG's resignation, dated Sept 4, will take effect 21 days after the notice. It was reappointed during Globetronics' last annual general meeting (AGM) on May 8 and was supposed to hold office until the conclusion of the company's next AGM.

In the meantime, Globetronics has shortlisted audit firm UHY Malaysia as its new auditor, pending the completion of official documentation to formalise the appointment, the company said.

APB acquired its 70 million shares in Globetronics for RM140 million or RM2 per share back in February. This was already a premium to the RM1.50 trading range of Globetronics shares at the time.

Based on Globetronics' last closing price of 54 sen, APB's stake would be valued at RM37.8 million, representing a paper loss of RM102.2 million for the engineering process equipment manufacturer.

Other shareholders of Globetronics include Ooi Keng Thye with a 11.39% stake, Lembaga Tabung Haji with 5.36%, and the Employees Provident Fund, whose stake has been reduced to 5.28% at the time of writing, from 13.26% at end-March.

At 54 sen per share, Globetronics had a market capitalisation of RM364.71 million.

The sell-off comes at a time when more analysts are turning bearish on the counter, amid continued erosion of earnings since 2018 that accelerated in the last three years despite a boom in the semiconductor industry in the two years post-pandemic.

The latest decline has brought Globetronics shares below its target prices, which averaged at RM1.15, according to Bloomberg.

Of the nine analysts covering the group, two had "sell" and "underperform" calls, six recommended "hold", and one had not rated the stock. The counter's target prices range between 97 sen by AmBank Research and RM1.22 by Nomura.

Affin Hwang Research, which has a "sell" call on Globetronics at RM1.10, cut its earnings forecast on the company, explaining there is "little visibility" on its businesses and the possibility of this sustaining a longer-term earnings turnaround for the group.

"More importantly, we think that the new major shareholders may still need to gain the trust of existing customers while also setting the growth direction for the company," it said.

AmBank Research also slashed its earnings forecast for Globetronics “to factor in a slower-than-expected recovery in orders amid an anticipated slow-down in global economic growth”.

“Near-term outlook for its existing business remains lukewarm as management expects weak volume loading from key customers over the next two quarters.

“Factory utilisation rate is expected to remain below 70% for the year,” said the research house, which has a "hold" call on the counter.

While Globetronics management has set aggressive capex spending, contribution will only be reflected in the second half of 2025, AmBank Research said.

In the first half ended June 30, 2024 (1HFY2024), Globetronics' net profit slipped 3.69% to RM10 million or 1.48 sen per share from RM10.38 million or 1.55 sen per share. Revenue fell 10.8% to RM57.66 million from RM64.64 million.