1H15 core earnings of MYR32.3m were in line with expectations. Maintain BUY with our TP unchanged at MYR7.10 (18x FY16F P/E, 16% upside). We continue to expect a stronger showing in 2H15 on more profound contributions from its wearable sensors as well as thecommencement of its 3D imaging sensor production by Oct 2015.

Results review. 1H15 revenue improved 2.1% YoY to MYR177.7m,lifted by higher volume loadings for both its sensor and timing and quartz devices segments. EBITDA, however, shed 12.5% YoY to close at MYR50.1m due to MYR3m-4m expenses incurred at its new 3D imaging sensor production line, coupled with the 3-4% cost-down measure by its customer under the timing and quartz device segment. All in, 1H15 core earnings were MYR32.3m (-0.4% YoY), lifted by lower depreciation charges (-34.4% YoY) as equipment for its proximity sensor production has been largely depreciated over the past 36 months. We deem this within expectations at 40.4%/42.1% of our/consensus full-year estimates, as we continue to expect a stronger 2H showing on more profound contributions from its wearable sensors as well as the commencement of its 3D imaging sensor production by Oct 2015.

2H15 sensor play. The new production line for its 3D imaging sensors is now being installed and will soon be qualified by its Swiss customer. The group is looking at an initial capacity of 20m units/month under Phase 1 expansion. We expect commercial production to commence by Oct 2015 at a target run rate of 4m-5m for a start. Phase 2 of the production ramp up, which will involve an additional MYR30m capital investment to double its capacity to 40m units/month, will be carried out by end-2015/early 2016 with full volume loadings by early-2Q16.

Earnings revision and risks. We make no major changes to our earnings forecasts at this juncture. Key risks are: i) fluctuations in the MYR against the USD, ii) higher raw material costs, and iii) a slowdown in the smart devices market.

Maintain BUY. All in, we are maintaining our BUY call with our TP unchanged at MYR7.10, based on 18x 2016 P/E. We advise investors to ride on the earnings accretion from Globetronics’ 3D imaging sensor segment, which, in our view, will likely drive the group’s earnings and share price to new highs.