Monday 4 August 2014

Gtronic: Into Health-Related Wearable Devices

GTRONIC's share price is making a remarkable run for the past 1 year. It has reached a high PE ratio of 25x base on FY13's earning.

This pace has exceeded my expectation and GTRONIC seems like a sure candidate for me to dispose in order to accumulate cash.

However, I'm quite reluctant to miss its fantastic dividends and future growth. 

Since last year, I'm anticipating a positive merger or acquisition by GTRONIC, just like what Inari has done on Amertron. Obviously this is still yet to materialize even though the company is in negotiation with 2 targets.

Anyway, it is learnt that an M&A is expected to be completed "within months" but some analyst expects it to be in FY15.

From a report by The Star back in May, it is clear that the company plans to diversify into electronic medical devices. 

It has just started production of health-related sensors from July, and those merger or acquisition targets are electronic medical manufacturing companies.

Besides, GTRONIC's management has hinted that its FY14Q2 will be better than Q1 and its overall FY14 revenue & net profit will most probably be better than FY13.

So I think the excitement will continue... New products, New Customers, New Business.

       Wearable devices - where the future lies?

Extracted & summarized from The Star (Globetronics In Expansion Mode - 24th May 2014):

GLOBETRONICS Technology Bhd is on the lookout for electronic medical manufacturing companies to either merge or acquire to broaden its revenue base.

Group CEO Heng Huck Lee says the group is now in talks with two potential partners in the ASEAN region to acquire a major stake in their electronic medical device manufacturing companies.

The electronic medical device manufacturing sector is a recession-proof business, which generates sustainable margins, according to Heng.

GTRONIC will be exploring to provide original equipment manufacturing (OEM) services and developing its own medical device brandname.

This is in line with the group’s recent business direction to develop sensors for bio and health wearable smart devices for US customers.

The sensors, according to Heng, enable the device to check the pulse rate, body temperature, blood sugar indication and sweating profile, and also provide real-time data to doctors.

These sensors are in the production start-up stage and will be delivered starting from July.

According to Technavio, the UK-based research and advisory company, the global medical device manufacturing services outsourcing market is projected to grow at a compound annual growth rate of nearly 12% over the 2013-2018 period.

       Ng: This is the man

On the group’s other business segments, Heng says the group would add a new light-emitting diode (LED) production line soon, which would start producing in September for one of the top four LED lighting manufacturer in the world.

For its crystal timing devices business, the group has just added a new production line to make the products for a Japanese customer serving the worldwide market.

GTRONIC now has a total of eight production lines making eight types of crystal timing devices, with a monthly output of about 150 million units.

Heng expects the second quarter 2014 to improve over the performance of the first quarter 2014 and the previous year’s corresponding period.

The new range of crystal timing devices, LED lighting products, and sensor products should enable the group to achieve another record breaking year for the revenue and the bottom line.

These three segments generate about 90% of the group’s revenue.

Heng says that the group has secured orders for its sensors from European Union and US customers for the second half of 2014.  

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