Globetronics’ 2014 core earnings of MYR64.4m were in line,  at 101% of our  FY14  forecast.  While  we  made  slight  adjustments  to  our  estimate after  tweaking  our  FY14F  full-year  numbers,  we  remain  NEUTRAL  on the stock. Our new MYR4.95 TP (1% downside, from MYR4.75) implies ahigher 18x FY15  target P/E. Going forward, its  prospects  remains solid,underpinned by healthy volume loading for most of its products

Within expectations.  Globetronics Technology’s (Globetronics)  12M14 net  profit  of  MYR64.4m  (+22%  YoY)  came  within  our  expectation,  at101% of our FY14 estimate. Its full-year PBT  improved  by  22% YoY to MYR76.2m while its EBIT margin rose 20.7% vis-à-vis FY13’s 18.9% on: i) higher sales  volume,  ii)  greater economies of scale,  and iii)  improved productivity and cost controls across the whole group.

4Q  a  seasonally  lower  quarter.  The  company’s  4Q14  numbers  were generally  lower  QoQ  as  4Q  is  a  seasonally  lower  quarter,  due  to  the festive  season.  4Q14  revenue  was  marginally  lower  (-1%  QoQ),  at MYR89.9m, while net profit dropped 13% QoQ to  MYR15.3m. The lower net profit was attributed to inventory adjustments in the supply chain and the  shutdown  of  manufacturing  hubs/customers’  facilities  during  Dec 2014.  As  at  end-Dec  2014,  Globetronics  had  total  net  cash  of MYR154.0m, which was equivalent to 56 sen per share.

Volume  loading  remains  healthy.  Globetronics’  management  guided that  its  sensor  business  would  be  its  earnings  growth  driver  going forward. Its  prospects  would be  underpinned by healthy volume loadingfrom both its sensor business and crystal quartz timing devices segment.

Maintain  NEUTRAL,  with  a  higher  TP  of  MYR4.95.  We  have  made slight  adjustments  to  our  forecast  after  tweaking  our  FY14  full-year numbers.  Maintain  NEUTRAL,  with  a  higher  TP  of  MYR4.95  (vs MYR4.75 previously),  pegged to a higher  FY15  target P/E  of  18x. At  its current  price  levels,  the  stock  still  offers  a  decent  FY15F-17F  net dividend yield of 4.4-5.0%.

Source: RHB