Shares of Globetronics Technology, an integrated circuits manufacturer, tumbled early Wednesday as the company issued a warning regarding its profitability for the upcoming year. The stock experienced a sharp decline of 7.5% before settling 6.9% lower at 1.49 ringgit ($0.33), erasing 26% of its gains over the past 12 months.
In its recent announcement, Globetronics revealed that its net profit for the second quarter had declined by 37% to MYR7.1 million ($1.6 million), compared to MYR11.2 million in the previous year. This decrease was primarily attributed to lower volume loadings and higher tax expenses. Additionally, the company’s revenue dropped by 34% to MYR31.5 million compared to the same period last year.
Looking forward, Globetronics anticipates uncertainty in end demand for the semiconductor industry due to several factors including rising inflation, manpower shortages, and macroeconomic and geopolitical issues. As a result, the company expects 2023 to be a challenging year with declining profitability.
MIDF Research, in light of Globetronics’ weak first-half performance, has maintained a sell rating with a target price of MYR0.99 for the stock. Analyst Martin Foo Chuan Loong stated that while demand for Globetronics’ sensor products may improve in the coming quarters, the company’s earnings for 2023 are expected to be significantly lower.
In summary, Globetronics Technology is bracing itself for a difficult year ahead as it grapples with various challenges impacting its profitability. The company’s second-quarter results reflect a decline in net profit and revenue compared to the previous year. With uncertainty looming over the semiconductor industry, Globetronics anticipates a tough road ahead in 2023.