Hard disk drive (HDD) shortages, and continued weakness in
These shortages - arising from flooding in Thailand and the Japanese earthquake - chipped $36m off revenues and cut operating profit by $9m last year. Earnings were also held back by continued weakness at Pace Europe, which his being reorganised following its exit from retail sales. Accordingly, European sales fell 19 per cent to $457.7m - although much of this has been mitigated by strong sales growth elsewhere. A full year's contribution from US-based pay TV operator 2Wire helped drive North American sales up 27 per cent to $1.07bn. Meanwhile, the continued adoption of set-top-boxes in Latin America has propelled sales from the region by 25 per cent to $469m.
Peel Hunt expects adjusted pre-tax profit of $98.4m in 2012, giving EPS of 22.6¢.
|ORD PRICE:||90p||MARKET VALUE:||£275m|
|DIVIDEND YIELD:||2.6%||PE RATIO:||11|
|NET ASSET VALUE:||133¢*||NET DEBT:||79%|
Pace remains the world's largest set-top-box maker and it's not impossible that a trade of private equity buyer could emerge. A forward PE ratio of six is hardly pricey, either. That said, the group is facing some significant challenges this year, leaving a catalyst for a near-term rating looking hard to spot. Hold.
Last IC view: Fairly priced, 109p, 17 August 2011