The diversity of IQE's (IQE) revenue streams reinforces its investment case, reducing industry-specific risk, while broadening commercial opportunities. This certainly played out through 2016, reflecting just how intertwined semiconductor technology has become with the wider electronics market.
The group, a supplier of wafer products and services to the semiconductor industry, revealed substantial full-year revenue gains across its end markets, helped along by sterling depreciation. The standout performance was attributable to the photonics (fibre optics, laser technology) segment, where the top line expanded 43 per cent to £22.8m. This business line has delivered a compound annual growth rate of 35 per cent over the past three years. Revenues at the core wireless market - around two-thirds of the group total - increased by 15 per cent during the period, while an encouraging performance from the infrared segment provides another pointer to future growth opportunities.
Margins were constricted due to a reduction in higher-margin licence income, while reported profits and earnings came up short of their 2015 comparatives due to an increase in non-cash charges and the effect of asset sales in the prior year. Discount these one-off effects and adjusted operating profits were up 17 per cent to £22.1m.
Edison expects adjusted pre-tax profits of £22.5m and EPS of 3.15p in 2017 (from £20.6m and 3.0p in 2016).
| IQE (IQE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 51.5p | MARKET VALUE: | £348m | |
| TOUCH: | 51.25-52p | 12-MONTH HIGH: | 55p | LOW: 16p |
| DIVIDEND YIELD: | nil | PE RATIO: | 18 | |
| NET ASSET VALUE: | 28p* | NET DEBT: | 20% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 88 | 6.1 | 1.2 | nil |
| 2013 | 127 | 5.2 | 0.9 | nil |
| 2014 | 112 | 5.2 | 0.3 | nil |
| 2015 | 114 | 19.4 | 3.0 | nil |
| 2016 | 133 | 19.0 | 2.9 | nil |
| % change | +16 | -2 | -4 | - |
Ex-div:- Payment:- *Includes intangible assets of £104m, or 15p a share. | ||||
