The market for Sepura's (SEPU) terrestrial trunked radios or Tetra - walkie talkies to you and me - is expanding rapidly. The Cambridge-based group is already active in more than 100 countries worldwide, but the recent acquisition of Spanish digital radio company Teltronic shows how Sepura is pushing for additional geographic scale, while also broadening its product portfolio as some clients migrate to digital products.
The company posted record revenues for the third consecutive year, and with the order book standing at a record high the group looks poised for further growth. On the negative side, gross margins narrowed due to an unfavourable product and customer mix, while the bottom line suffered from a €1.8m provision against a contract in Greece.
The top line was bolstered by a 15 per cent increase in the number of radios delivered worldwide. Of the 217,000 units shipped, 31,000 were bound for new public safety customers in Saudi Arabia. Sepura has been contracted to supply another 63,000 radios to the Desert Kingdom through to March 2016, underlining how increased civil strife in the Middle East is helping to underpin sales.
Demand for the core Tetra products remains buoyant in Germany, Sepura's largest marketplace: 65,000 radios were delivered during the period and there's a current order backlog of around 53,000 units in the country.
Broker Liberum expects adjusted pre-tax profits of €25.8m for the current financial year, giving EPS of 13¢ (FY2015: €14.6m and 9.7¢).
| SEPURA (SEPU) | ||||
|---|---|---|---|---|
| ORD PRICE: | 165p | MARKET VALUE: | £303m | |
| TOUCH: | 164-165p | 12M HIGH / LOW: | 169p | 127p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 46¢* | NET DEBT: | 1% | |
| Year to 27 March | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 71 | 2.5 | 3.0 | 1.36 |
| (€m) | (€m) | (¢) | (p) | |
| 2012 | 83.0 | 4.6 | 4.5 | 1.46 |
| 2013 | 105 | 7.9 | 6.6 | 1.68 |
| 2014 | 117 | 14.2 | 9.5 | 2.0 |
| 2015 | 131 | 16.7 | 10.9 | 2.4 |
| % change | +12 | +17 | +15 | +20 |
Ex-div: 27 Aug Payment: 9 Oct £1 = €1.41. *Includes intangible assets of €66.6m, or 36¢ a share. | ||||
