SINGAPORE (May 11): RHB is maintaining its “buy” call on Global Invacom with a 26 cents target price as the company bounces back to profitability in 1Q.
The turnaround was driven by its US subsidiary as well as sales of its next-generation satellite products.
To recap, Global Invacom reversed a US$0.7 million loss in 1Q16, to a US$0.6 million ($0.8 million) NPAT in 1Q17, driven by its US subsidiary that designs and manufactures antennas for broadband and satellite.
Sales for its next-generation low-noise blocks (LNBs) have also started as global broadcasters began switching to the latest DCSS-based solutions.
Gross profit margin increased to 21.9% compared to 18.5% the previous year, helped by ongoing improvements in manufacturing efficiencies, specifically at Global Skyware in the US, while lower research and development (R&D) costs on the weakened GBP have helped lower costs in the UK.
In a Thursday report, RHB analyst Jarick Seet expects Global Invacom’s revenue and margins to keep on improving going forward, as it continues to roll out new-generation equipment.
Foxcom, one of Global Invacom’s R&D and manufacturing arms, is shipping its low-cost iridium/GPS repeater to a leading international airline for installation at one of its aircraft hangars at the end of May.
The repeater, which debuted in Oct 2016, is the latest solution for use inside aircraft hangars in the highly successful range of iridium and GPS repeaters that Foxcom launched in 2013. Iridium satellite equipment currently used worldwide has been limited to outdoor use.
In addition, Echostar, one of Global Invacom’s largest customers, has approved its Eastern Arc Twin Generation 2 Hybrid product, which uses digital channel stacking system (DCSS) technology.
As Global Invacom is one of only two suppliers to Echostar for this new-generation product, RHB expects it to benefit from this replacement cycle.
“Since the new product was launched only recently in 4Q16, we expect its sales volume to continue growing going forward,” says Seet, “we are also projecting higher margins for the new model, compared to the current version.”
Global Invacom expects to deploy the DCSS technology across its LNBs for all customers and territories over the next 12 months, and expect sales to increase throughout the year.
Shares of Global Invacom are trading 1 cent higher at 17 cents.
