9M15 core earnings of MYR55.2m fell marginally below our expectations at 69.0% of our full-year estimate due to higher-than-expected start-up expenses incurred for its 3D imaging sensors. That said, we see this as a temporary blip as we continue to expect a strong showing in 2016 on the full commencement of its 3D imaging sensor production by 2Q16.Maintain BUY with our TP unchanged at MYR7.10 (16% upside).

Results review. 9M15 revenue stayed flattish at MYR266.4m as higher volume loadings for both its sensor and timing and quartz devices segments were mostly offset by lower ASPs due to cost-down measures by its customers. EBITDA shed 8.4% YoY to close at MYR77.4m due to MYR4m-5m expenses incurred at its 3D imaging sensor production line. 9M15 core earnings were MYR55.2m (+14.7% YoY), lifted by lower depreciation charges (-41.5% YoY) as equipment for its proximity sensors has been fully depreciated. We deem this below our forecast but within consensus expectations at 69.0%/71.5% of the respective full-year estimates, given higher-than-expected start-up expenses incurred at its 3D imaging sensor production line.

Other updates. Globetronics is looking to commence commercial production of its new imaging sensors by end-November with an initial capacity of 2m-3m units per month. Although this fell marginally short ofour previous expectations of 5m units per month, we believe the slight delay in ramp-up could be due to fine-tuning of technical specifications. We are still expecting full volume loadings of 30m-35m units per month by 2Q16. On a side note, management guided that its wearable sensor is now running at 2m units per month (vs 3m previously). W e suspect this is due to its end-customer’s more precautionary approach in inventory management amid fears over global economic slowdown.

Earnings revision and risks. We trim FY15F EPS by 4.1% to take into account the factors above. We retain FY16F-17F EPS 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), as we continue to expect a strong showing in 2016 on the full commencement of its 3D imaging sensor production by 2Q16. We see the results disappointment as a temporary blip and advise investors to accumulate on weakness.