The market greeted IQE's (IQE) return to profit by sending the shares down 7 per cent. A July trading update from the maker of ultra-thin wafers used in smartphones, solar panels and power convertor semiconductors already flagged that adjusted operating profit rose 5 per cent in the first half. So investors may have focused instead on a 2 per slip in revenues in the group's wireless segment, which accounts for three quarters of sales.
That was the only major weak spot in these results. Yet management blamed one customer's "temporary production disruption", which caused some expected sales from the second quarter to trickle into the third, rather than the wider issue of tepid handset sales in sluggish emerging markets.
There were no such problems for the non-wireless businesses. Thanks to successful customer product development programmes, IQE's photonics segment led the pack with 28 per cent revenue growth. Further diversification is expected, too, as the group made progress in launching new technologies for high-growth solar, power control and LED markets.
The group also added to its power-switching portfolio by confirming an exclusive licence and option agreement to acquire Translucent’s rare earth oxide semiconductor technology. IQE will pay a maximum $1.5m (£0.98m), with an option to purchase the technology for $5m within the 30-month licence period.
Broker N+1 Singer forecasts adjusted EPS of 2.5p, up from 2.4p in the year to December 2014.
| IQE (IQE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 24p | MARKET VALUE: | £159m | |
| TOUCH: | 23.5-24p | 12-MONTH HIGH: | 27p | LOW: 12p |
| DIVIDEND YIELD: | nil | PE RATIO: | 13 | |
| NET ASSET VALUE: | 19p* | NET DEBT: | 25% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 52.0 | -2.3 | -0.9 | nil |
| 2015 | 53.2 | 3.9 | 0.7 | nil |
| % change | +2 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of £81.3m, or 12p a share | ||||
