Sentiments on semiconductor-related stocks are generally not positive as order book replenishment by the companies is not going to be robust. In fact, there is a cloud of uncertainty as the slow recovery in the industry is expected.

Globetronics Technology Bhd is among semicon related counters that would see near-term earnings prospects being capped by a slowdown in the global economy. But share price of Globetronics has been on the rise especially in the past month, up 11.2% to close at RM1.69 on Dec 8, giving it a market cap o RM1.1 billion. This is close to its 52-week high of RM1.73 and a good run up from its year low of 99 sen. On a year-to-date basis, the counter has appreciate by some 47%.

Technical analysts are expecting further upside for Globetronics after it gapped up and pushed above the RM1.60 resistance. Fueling the share price could be talks of the emergence of a new shareholder, but these are just talks.

Globetronics builds its sensors, which are its main revenue contributor, as well as encoders for a variety of automation and industrial applications. Its sales volume is also significantly dependent on revenue generated from quartz crystal and timing devices. These devices are used in a multitude of electronic products, such as mobile devices, GPS, and PCs.

Sales are primarily in Asian markets, with the United States accounting for a significant share.

Globetronics share price may be faring better but not its financial performance. For the third quarter ended Sept 30, 2023, the company posted lower net profit of RM9.5 million compared with RM12.8 million a year ago. This was due to lower revenue of RM34.6 million versus RM46.3 million a year earlier.

Globetronics saw lower volume loadings from certain customers in 3Q23 as well as lower forex gain of RM0.4 million versus RM3.9 million a year ago.

On a 9-month basis, net profit was down to RM19.9 million from RM33.4 million a year ago while revenue fell to RM99.3 million from RM137 million. It recorded higher tax expense of RM5.5 million compared to RM3.6 million a year earlier while there was a lower forex gain of RM4.3 million versus RM5.7 million.

But things could turn for the better for Globetronics as it is in the midst of diversifying its portfolio into non-consumer products in the industrial and automotive sectors. However, it would take a long time before these non-consumer products start generating meaningful income for the company.

Investors are probably wary of the counter’s growth prospects but rumours of new shareholder coming in may be a catalyst to drive up the share price.

GTRONIC has broken out of the consolidation phase and is now in a strong uptrend. The high volume on the upbars indicates that the buyer is dominant. The chart also shows a healthy Pullback that signals the continuation of the trend.