These solid half-year results from micro-chip maker CSR (CSR) are all the more impressive because comparable figures from last year include the company’s handset connectivity division, which CSR sold to electronics giant Samsung late last year for $310m (£199m) in cash.
Overtaken by fierce competition in handset chips, the sale marked a major transformation in CSR’s fortunes as the slimmed-down group is now able to concentrate on building market share in other, higher-margin products where it has an advantage. And the bold strategy looks to be paying off handsomely for the group and for shareholders, with CSR’s share price tripling in just over a year since our buy tip (213p, 25 May 2012).
Core revenues rose 18 per cent year-on-year to $375m, driven by 94 per cent growth in the voice and music segment, which accounted for $92.6m in sales. True, revenues from the consumer segment - cameras and gaming - fell by a third to $46.9m due to the increasing use of smartphones for photography and games. But this should be partly counterbalanced by continued growth in the automotove segment, which accounts for a quarter of revenues, as automobile ‘infotainment’ chip sales increased by 6 per cent year-on-year in the first half.
Broker JP Morgan forecasts adjusted EPS of 45¢ in the current year and 46¢ in 2014, up from 27¢ in 2012.
CSR (CSR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 606p | MARKET VALUE: | £1.0bn | |
| TOUCH: | 605-607p | 12-MONTH HIGH: | 619p | LOW: 292p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 419¢* | NET CASH: | $284m | |
| Half-year to 28 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 494 | -9.4 | -5.0 | 3.80 |
| 2013 | 500 | 27.0 | 12.0 | 4.50 |
| % change | +1 | - | - | +18 |
Ex-div: 14 Aug Payment: 6 Sep £1=$1.53 *Includes intangible assets of $289m, or 175¢ a share | ||||
