Although full volume loadings of its 3D imaging sensors have beendelayed to June (from April), we remain hopeful that Globetronics’ sensordivision would propel earnings to a new high in 2016. Our channel checkssuggest that the group could soon unveil a new sensor-related product by2Q16. Maintain BUY and MYR6.66 TP (18x 2016F P/E, 20% upside).

Delay in 3D imaging sensors. Globetronics’ new 3D imaging sensors have commissioned in end-2015 with an initial run-rate of 200,000-300,000 units per month. Nonetheless, we understand that full volume loadings of 30m-35m units per month have been delayed to June (from April), pending final confirmation from its end-customer. We estimate that Globetronics has incurred MYR25m-30m of capex for this new capacity expansion, with another MYR45m-50m to be incurred in 1H16.

New products in the pipeline. Although management remains tight-lipped on the potential new products beyond its 3D imaging sensors, our checks with sources suggest that the group could soon commence production of a new sensor-related product, which might be incorporated into the next-generation flagship smartphones. We believe the qualification process is currently ongoing and should be completed latest by 2Q16.

Dividend play. Following the retracement in its share price over the past two months, we project its dividend yield at 4.3-4.5% pa. Key risks include: i) customer concentration risk, as we expect c.60% of its FY16 revenue to come from its major Swiss customer, ii) a potential slowdown in global spending on technology products, and iii) fluctuations in USD/MYR.

Maintain BUY. All in, we maintain our BUY call as we deem the recent selldown as a good opportunity to buy on weakness. We continue to advise investors to ride on the earnings accretion from its ongoing capacity expansion in the sensors segment as we move towards 2H16. Our TP stands unchanged at MYR6.66, based on 18x 2016F P/E.