The growing use of electronics in vehicles, hospitals and shops has been a boon for machine-to-machine (M2M) communication specialist Telit Communications (TEL). The group recorded its fifth consecutive year of double-digit sales growth, which sent adjusted cash profits up 29 per cent to $34.7m (£23.3m).
Telit has shifted from its historical focus on cellular, short-range radio and positioning technology towards connectivity and cloud services. Sales of its new wireless platform, m2mAIR, more than doubled to $20m. That helped widen the overall gross margin by 1.6 percentage points to 39.6 per cent.
Group sales in the Americas and Asia Pacific leapt 29 per cent and 45 per cent, respectively, due to increasing adoption of high-speed 3G and 4G wireless technology in areas such as healthcare, point-of-sale devices and remote monitoring. In the US, Telit certified its first industrial, high-speed 'LTE' module with mobile carriers AT&T and Verizon. Management expects robust demand in energy and router markets to drive up sales of the technology this year.
Telit's research spending climbed 55 per cent to nearly $49m as it developed high-speed wireless technology for the automotive and industrial markets. It also acquired automotive communications specialist ATOP in April, which added several automotive security and computing modules to its product range.
Broker Canaccord Genuity expects cash profits of $46.3m, giving EPS of 23¢ (from $34.7m and 18¢ in 2014).
| TELIT COMMUNICATIONS (TCM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 207p | MARKET VALUE: | £236m | |
| TOUCH: | 206-207p | 12-MONTH HIGH: | 287p | LOW: 172p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 29 | |
| NET ASSET VALUE: | 86¢ | NET DEBT: | 4% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 132 | 6.5 | 11.3 | nil |
| 2011 | 177 | 2.2 | 1.6 | nil |
| 2012 | 207 | 4.9 | 3.8 | nil |
| 2013 | 243 | 12.0 | 10.5 | nil |
| 2014 | 294 | 13.9 | 10.6 | nil |
| % change | +21 | +16 | +1 | - |
*Includes intangible assets of $72.6m, or 63¢ a share £1=$1.49 | ||||
