Advanced wafer products maker IQE reported record second-half revenues of £31.2m after rapid de-stocking in the first half. Such a stark turnaround saw a £833,000 first-half operating loss turn into a £3.4m profit between July and December. At the same time, net debt was cut from £18.1m to £14.9m, partly thanks to strong cash conversion.
IQE, whose semiconductor wafer products are used in mobile handsets, Wi-Fi and DVDs, has benefited from volume hikes in smartphones as consumers rush for the latest gadgets. 3G handsets typically use four or five times the number of Gallium Arsenide chips than the previous generation of handsets, explains chief executive Drew Nelson. The company will continue to concentrate on high-speed wireless communications markets, which account for almost 80 per cent of sales and all operating profits. Opportunities in optoelectronics (converting light into electricity) also exist, such as Blu Ray technology and LEDs, while developments in renewable energy, such as 'green' CPV solar cells are also on the cards.
Panmure Gordon predicts adjusted pre-tax profit of £4.1m and EPS of 0.93p in 2010 (£3.9m and 0.64p in 2009).
IQE (IQE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 17.5p | MARKET VALUE: | £78m | |
| TOUCH: | 17.25-17.75p | 12-MONTH HIGH: | 21p | 4p |
| DIVIDEND YIELD: | nil | PE RATIO: | 37 | |
| NET ASSET VALUE: | 6.75p* | NET DEBT: | 50% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 20.8 | -4.29 | -3.20 | nil |
| 2006 | 32.4 | -3.99 | -1.36 | nil |
| 2007 | 50.1 | -0.86 | -0.20 | nil |
| 2008 | 60.5 | -1.39 | -0.32 | nil |
| 2009 | 52.7 | 2.06 | 0.47 | nil |
| % change | -13 | - | - | - |
*Includes intangible assets of £19.2m, or 4p a share | ||||
