I just found out this article from Globetronics website. The source is from Digital News Asia dated Oct 21, 2013. It writes a bit of Globetronics's past, present and future, which I think is great.
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by Karamjit Singh
IT was the hot startup of its era –
before the Internet and its dotcom craziness, before smartphones,
before buzzwords like pivot, and almost before the venture
capitalists (VCs) came in.
Though a Malaysian Government VC did
play a critical role in its early days, which today sees Globetronics
Technology Bhd standing proud as a leading listed Malaysian company
in the semiconductor value chain, with revenues in 2012 of RM290
million (US$92 million). Near-term revenue growth looks set to be
strong with RHB Research Institute forecasting 2013 revenues hitting
RM361.8 million (US$114.8 million) and 2014 reveneus of RM448.1
million (US$142.1 million).
It is also a company that has the
enviable record of having enjoyed a continuous string of profitable
quarters since its inception in the northern Malaysian state of
Penang in 1991 – a sizzling run. This attracted the attention of
Malaysian Technology Development Corporation (MTDC), then a newly
launched government venture fund.
MTDC came in with a 30% stake in 1992
at a PE (price/earnings) ratio in the high teens, and the confidence
from this investment provided a further fillip to the founders that
they were on the right path.
Globetronics senior management team
(L-R): Michael Ng Kweng Chong, founder and executive chairman; Heng
Huck Lee, CEO; Ng Kok Yu, corporate manager; Ng Kok
Choon, chief financial officer.
Globetronics did have a running
start as a startup too. It began life with a multinational giving it
guaranteed business, in this case the Penang operations of US
semiconductor giant Intel Corp.
But there was still a lot of ups and
downs for the founders. For instance, just as banks today don’t
understand the Internet, back then, they did not understand the
semiconductor sector.
“So the founders had to dig up every
dollar saved, RM3 million, to start Globetronics,” says Heng Huck
Lee, its chief executive officer.
Heng, came on board in 1996. Like
Globetronics founders Ng Kweng Chong and C.K. Tan, Heng was formerly
at Intel too.
Why did Intel encourage Ng among all
their senior Malaysian team at that time, as the person they wanted
to outsource production too? According to Heng, this was because, as
a general manager of
Intel Malaysia at the time, Ng was seen
as having the most financial resources to be able to fund
Globetronics before revenue flowed in. “Plus, he came from a family
that was fairly well off too,” says Heng.
The management team today is led by
Heng, with Ng’s son, Ng Kok Yu, involved as corporate manager.
While Intel gave Globetronics a running
start, including recommending it to Sumitomo as its local partner
when the Japanese firm wanted to establish a manufacturing operation
in Malaysia in 1994, Globetronics does little to no business with
Intel today. In fact, all its end customers are overseas.
Globetronics was listed on the Kuala
Lumpur Stock Exchange (now Bursa Malaysia) in November, 1997.
At the same time, the founders and
their management team have since then made all the right bets to
transition from a low-end player in the semiconductor value chain to
an integrated IC (integrated circuit) design and manufacturing
company.
Globetronic’s newly installed
multimillion-dollar manufacturing line.
In fact, one of the world’s top two
smartphone manufacturers has seen fit to sign an exclusive three-year
manufacturing contract with Globetronics to supply it with the
high-end sensors that go into smartphones and tablets.
When asked about the secret to its
success, Heng just says, “Technology changes to fast that you are
forced to adapt or risk being left behind.
But one clue may lie with Globetronics’
strong focus on not just R&D, but also D&D or design and
development, which is very much led by customer needs. The research
unit was formally established in 2002.
“Our D&D is focused on our
customers’ future requirements, and this allows us to stay relevant
to them and to help us reinvent ourselves,” says Ng Kok Yu,
pointing out that Globetronics was among the first Malaysian IC
manufacturers which ventured into making LED (light-emitting diodes)
components in 1998.
As a result, it has been enjoying 20%
growth rates in that business line ever since.
Customers will typically want to test a
manufacturer out first by giving it a small job. When they have a
little more confidence in you, they will then ask to co-develop a
product and after that, the next step is to have you make the product
for them.
“This is how we have gained
knowledge, new technologies and products; and how we have moved up
the value chain with our customers,” says Heng, whom Kok Yu credits
with having a sharp nose for future technology trends that
Globetronics has bet on.
The current trend it has invested
heavily in to build capacity is around the use of sensors in
smartphone and tablets, especially proximity sensors to save battery
life, and gesture sensors.
“New sensors such as gesture sensors
are coming very soon and here we have a very good partner from
Switzerland with whom we have co-developed the technology, and herein
lies our competitive advantage,” claims Heng.
Globetronics is also claiming to be the
first company in the world to integrate the proximity sensor and
emitter into a single chip. Apparently, most companies cannot package
this into an integrated chip due to limitations in sensitivity and
limitations in technology to package it small enough.
But Globetronics has, with its
sensor (pic: smart phone sensors on a 8" wafer
substrate) being the smallest in the world.
“This is our competitive advantage
and is not an easy technology for people to try and take away our
market share. That’s why no one can replace us,” claims Heng.
Its efforts in research have not gone
unnoticed. MIDA (the Malaysian Investment Development Authority) has
granted it an RM20-million (US$6.3-million) Domestic Investment
Strategic Fund in 2012, which is claimed via reimbursement.
MIDA is a government agency that
promotes the manufacturing and services sectors in Malaysia.
The funding will likely used for
enhancing Globetronics’ sensor technologies and smartphone imaging
products.
It was not an easy journey. It took 15
months of convincing to get its Swiss customer to co-produce this
sensor. Along with the global smartphone customer, “the process has
been very demanding, and particularly in terms of them assessing our
company systems and people,” says Heng.
But Globetronics has passed all the
meticulous tests and is not resting on its laurels. Heng shares that
it has a small war-chest of up to US$20 million for a ‘first bite’
to invest in interesting companies.
“So far, we have not seen anything
that we have been unable to resist,” he says, eager to emphasise
that Globetronics is still as hungry as ever. It will grow via the
acquisition method or organically.
For now, with its focus on the LED and
sensors market, Globetronics is looking at between 15% and 20% annual
growth over the next three to four years.
“We are very confident that we have
the right products in the right growing segments. Coupled with that,
if we can translate all our major efforts in development and R&D
to some new products, the next three to five years will be very
exciting for us,” says Heng.
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Good management, high dividend payout (70-80%), exclusive products (proximity sensor), new products (gesture sensor) & potential new revenue (acquisition?) make Globetronics really interesting at this stage.
Compared to Inari, Globetronics may be a "safer" stock to invest in, at least for the medium term.
The only thing that is not attractive is its share price.
However, Globetronics share price has dropped 14sen or 4.5% the day after its FY13Q3 financial result announcement. This could be a healthy price correction though.
