SINGAPORE (Oct 20): RHB is reiterating its &ldquo buy&rdquo call on Global Invacom Group with an unchanged target price of 28 cents, on positive expectations of its upcoming 3Q16 earnings results.

(See also: Global Invacom results well received by RHB)

The satellite communications equipment provider recently received approval to supply its new generation of Low Block Noise (LNB) products from its largest customer, Echostar Corporation &ndash specifically the Generation 2 Hybrid (EA Twin Gen II) system.

In a Thursday report, analyst Jarick Seet says this marks a significant achievement for the company, confirming it as a &ldquo leading supplier of the latest satellite communications technology&rdquo .

Seet is also optimistic that 3Q16 will be an earnings inflection point for the company, and their earnings turnaround should be further validated by this approval. Going forward, he expects earnings to recover to its previous FY13-14 levels.  

&ldquo As Global Invacom is one of the only two suppliers for this new generation of products to Echostar, we believe that the company would benefit more from this replacement cycle compared to previously where there were four suppliers instead of two,&rdquo Seet asserts.

&ldquo We expect volumes to increase once this product is rolled out in November 2016. In addition, margins would usually be much higher for new models as compared to the current version that the company is supplying.&rdquo

(See also: Global Invacom swings into the red in FY15)

Additionally, the analyst thinks the company is likely to benefit from the launch of its new satellite, Jupiter 2, by end 2016.

&ldquo Assuming no earnings drag from one-off costs, we expect Global Invacom to bounce back into profitability in FY16F, with the bulk of the earnings rebound to be seen in 2H16,&rdquo he concludes.

As at 9:45am, shares of Global Invacom are trading 0.76% higher at 13.3 cents.