Shares in IQE tumbled 10 per cent after it recorded a sharp top-line decline in the first half. The group, which makes semiconductor components called wafers, blamed the fall on currency headwinds and customers paring down their inventories amid flagging demand for smartphones. Investors may also have been wrong-footed by a £13m non-cash charge for a new research centre in Singapore, announced just a day before the results.
Sales slumped 23 per cent at IQE’s wireless communications division, which accounts for four-fifths of revenues. However, management expect the current wave of smartphones and wearable devices, such as the iPhone 6 and Apple Watch, to rekindle demand for the semiconductors that power them, and thus IQE’s wafers. They also point to the spread of connected devices - the so-called Internet of Things - and the roll-out of superfast 4G wireless technology as potential tailwinds for the business.
Modern devices are increasingly using sensors to measure consumers’ activity, scan their fingerprints for security purposes or interact with them when they pass a particular shop or product. That trend helped IQE’s smaller photonics division, which specialises in infrared sensors and imaging, increase its constant-currency sales by 22 per cent.
Broker N+1 Singer expects pre-tax profits of £14m this year, giving EPS of 2.1p, up from £11.6m and 1.8p last year.
| IQE (IQE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 18p | MARKET VALUE: | £ 117m | |
| TOUCH: | 17-18p | 12-MONTH HIGH: | 32p | LOW: 16p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 16p* | NET DEBT: | 34% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 63.0 | 2.5 | 0.4 | nil |
| 2014 | 52.0 | -2.3 | -0.9 | nil |
| % change | -17 | - | - | - |
*Includes intangible assets of £74.7m, or 12p a share | ||||
