Gtronic: Driven By 3 New Products

Globetronics FY13Q4 Financial Result

GTRONIC (RM mil)	FY13Q4	FY13Q3	FY13Q2	FY13Q1	FY12Q4
Revenue	78.5	79.5	85.5	77.5	85.3
PBT	15.0	18.6	16.5	12.3	10.9
PBT%	19.1	23.4	19.3	15.9	12.8
PAT	13.1	15.2	14.1	10.1	11.1
Total Equity	275.2	285.8	276.9	259.0	261.1
Total Assets	338.8	343.8	331.9	309.7	326.1
Trade Receivables	62.4	60.0	63.3	60.1	67.5
Inventories	14.2	17.2	15.4	16.0	17.8
Cash	147.3	148.8	131.0	109.7	106.1
Total Liabilities	63.6	58.1	55.1	20.7	65.0
Trade Payables	18.4	15.6	19.3	18.1	25.8
Other Payables	34.3	32.6	30.8	27.6	32.4
ST Borrowings	5.2	4.8	0.0	0.0	0.0
LT Borrowings	0.0	0.0	0.0	0.0	0.0
Net Cash Flow	41.5	42.2	24.6	3.5	6.8
Operation	87.5	62.3	40.3	18.1	61.0
Investment	-11.2	-9.4	-7.1	-2.3	-25.6
Financing	-34.7	-10.7	-8.6	-12.3	-28.6
EPS	4.73	5.51	5.15	3.73	4.16
NAS	0.99	1.03	1.00	0.95	0.96
D/E Ratio	net cash	net cash	net cash	net cash	net cash

Gtronic's FY13Q4 result is flat. Compared to its preceding quarter, revenue drops by RM1mil and net profit also drops RM2mil.

For the whole FY2013, revenue grows 10.8% to RM321.4mil while net profit is 27.4% better from RM41.3mil to RM52.6mil.

Its balance sheet & cash flow remain strong, and FY13 ROE improves to 19.1.

According to the management, its FY14Q1 results will also be flat.

GTRONIC (RM mil)	FY13	FY12	FY11	FY10	FY09	FY08
Revenue	321.4	290.0	265.0	279.2	217.5	275.5
Revenue growth %	10.8	9.4	-5.0	28.3	-21.0
PBT	62.5	48.3	30.2	37.4	19.2	29.6
PBT%	19.4	16.7	11.4	13.4	8.8	10.7
PAT	52.6	41.3	26.7	29.7	15.9	21.8
PAT growth %	27.4	54.7	-10.1	86.8	-27.1
EPS	19.02	15.31	9.99	11.20	6.07	8.31
NTA	0.99	0.96	0.92	0.92	0.86	0.85
ROE	19.1	15.8	10.8	12.4	7.0

Has Gtronic reached its peak?

In its "prospect" segment of FY13Q4 financial report, Gtronic mentions that it is optimistic of achieving better performance and growth in FY2014. 

In interview with local press, the management is hopeful of double digit growth in FY2014.

Gtronic's major revenue comes from LEDs and sensors, which are used in general lighting and mobile devices. As I think these 2 areas are the inevitable trend of the future, Gtronic is certainly on the right track currently.

As technology changes very fast, Gtronic needs to keep on improving its products to keep up with the latest trend.

According to the management, Gtronic is set to introduce 3 new products equipped with latest technology in the second half of FY14, which are a new range of LED chips, 3-dimensional imaging modules and multi-port sensors.

If all these new products are successful, it should contribute positively to the group as a new stream of income in the second half of FY2014.

So investors might need to endure non-exciting financial result in the first half of FY2014.

Gtronic has declared its first interim single tier dividend of 2sen + special dividend 5sen for its FY14. Base on last year's trend, the company will only declare its final dividend for FY13 in the second quarter of FY14.

Last year, a 5sen regular dividend was given as first interim dividend of FY13, but there is no special dividend in this period of time.

Gtronic's share price is well above my target price of RM2.96 since 4 months ago. However, I didn't sell all the shares as apart from giving good dividends, I think it still can generate more earnings in the near future.

One of  my sell strategy is when the share price is well above my own target price. I should have sold Gtronic earlier when its price exceeds my target price by 15%.

I'm not sure whether it is right or wrong to keep Gtronic's shares. Only time will tell.