Expect significant new tariffs on Chinese imports and moderate levies on goods from other nations , as President-elect Donald Trump rolls out his protectionist agenda. However, with his preference for chaotic policymaking and sudden shifts , there’s uncertainty on how soon these import taxes will actually hit. Dubbed “ Tariff Man ,” Trump aims to use tariffs both strategically and tactically . He’s mentioned taxing all Chinese goods up to 60% and potentially setting 10%-20% tariffs on imports globally , but details on these plans remain vague . Key players within Trump’s team are divided: Robert Lighthizer , a staunch tariff advocate, sees permanent duties as crucial to balance US trade , while others, like billionaires John Paulson and Scott Bessent , view tariffs as temporary leverage. Trump’s previous administration had mixed feelings, especially on national security-related trade limits , which he sometimes dismissed, favoring an “open for business” approach. High-profile busin
Shares of Globetronics Technology Bhd (KL) fell to their lowest level in 15 months on Monday following the release of the company's second-quarter results, which missed analysts' expectations. The stock dropped as much as 6.3% to RM1.05, marking its lowest point since May 2023, and was trading at RM1.06 by 9:50 am, with a market capitalization of RM716 million.
Key Points:
Disappointing Earnings: Globetronics reported a net profit of RM4.3 million for the second quarter ended June 30, 2024, on revenue of RM27.76 million. The company's net profit for the first half of 2024 amounted to RM10 million, which accounted for just 26% of UOB Kay Hian Research’s full-year forecast and 29% of consensus estimates.
Analysts' Downgrades: At least three research houses have cut their target prices and slashed earnings projections for Globetronics, citing weaker-than-expected loadings from key customers. UOB Kay Hian reduced its 2024 and 2025 earnings forecasts by 25% and 23%, respectively, and revised its target price for Globetronics to RM1.20 from RM1.30.
Challenges Ahead: Globetronics faces stiff competition in the premium wearables market and uncertainty over new customer onboarding. Maybank Investment Bank also cut its earnings estimates for the company by 36% for FY2024, 20% for FY2025, and 19% for FY2026. The investment bank lowered its target price to RM1.17 from RM1.65, maintaining a "hold" rating on the stock.
Future Outlook: Despite the current challenges, Globetronics remains relevant as a proxy to the 5G, Internet of Things (IoT), and Vertical-Cavity Surface-Emitting Laser (VCSEL) markets. The company is developing new sensors for commercialization in the second half of 2024 and is actively engaging potential Chinese and Taiwanese customers for future growth.
Dividend Expectations: Due to the weak performance, future dividends are expected to be lower compared to FY2023, with a dividend yield projected to be less than 2%, according to MIDF Research. MIDF also revised its target price downward to RM1.09 from RM1.10.
Market Sentiment: The stock closed the morning session on Monday at RM1.05, down 6.25% from its previous close of RM1.12 on Friday, August 23. Globetronics currently has six "hold" recommendations and two "sell" calls, with a consensus 12-month target price of RM1.24, representing a potential 10% upside from its last traded price.
Globetronics is facing a challenging environment with weaker customer demand and increased competition, which has led to a significant drop in its stock price and earnings projections. The company is working to secure new business, but any positive impact is expected to be seen only towards the end of the year.
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