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Zytronic recovery on track

Zytronic is on the mend and demand for high-tech touch screens is rising
May 13, 2014

What a difference a year makes. Twelve months ago, touch-screen-sensors company Zytronic (ZYT) had just issued a profits warning after struggling to convert interest into orders. Now, pre-tax profit for the first half has risen 87 per cent to £1.4m and house broker N+1 Singer has upgraded its full-year earnings forecasts by 11 per cent (to 14.7p a share) and by 7 per cent for 2015.

IC TIP: Buy at 238p

A 9 per cent jump in sales of higher-margin touch products used in shopping malls, museums, bus stops and stadia was crucial. They now make up 77 per cent of all sales and demand is growing. Redesigned ATMs, mothballed ticket-machine projects resurrected in both France and Germany, and huge gaming screens sold to casinos were the key drivers. That easily offset falling sales of non-touch products, mainly ATM display filters, and a sharp fall in bill-payment kiosks to the former Soviet Union - where cash is still king - following the fighting in Ukraine. There’s also a decent pipeline of what chief executive Mark Cambridge calls high-probability projects. “We can taste them,” he tells us, “but this is just a small snapshot of the pipeline.”

Costs fell by £0.5m in the first half, and further cuts are possible. Zytronic's cash pile could pay down property loans early, although finance boss Claire Smith would like to stabilise the business first.

ZYTRONIC (ZYT)

ORD PRICE:238pMARKET VALUE:£ 35.9m
TOUCH:237-240p12-MONTH HIGH:273pLow:     144p
DIVIDEND YIELD:3.9%PE RATIO:16
NET ASSET VALUE:109p*NET  CASH:£4.6m

Half-year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20138.50.84.12.75
20148.81.47.72.85
% change+4+87+88+4

Ex-div:09 Jul

Payment:25 Jul