Slowing smartphone sales and subsequent inventory reductions among industry suppliers weighed on IQE (IQE) in 2015. The manufacturer of 'wafers' - advanced semiconductors used in microchips - posted lower sales and profit in its core business. But include £8m in licensing income and adjusted operating profit climbed 8 per cent to £19m.
IQE's maiden licensing revenue stemmed from recent joint ventures intended to develop and monetise its intellectual property. The other highlight was a 28 per cent rise in photonics revenue, as its laser and sensor offerings were deployed in data centres, mobile devices and fibre broadband cables. It also made strides into the burgeoning power, solar and infrared markets. The upshot was that non-wireless sales made up 30 per cent of total turnover, up from 20 per cent in 2014.
Sales slid 11 per cent in the key wireless business, but management remains positive: new products are snatching market share and it recently inked a $55m (£38.7m) wireless contract. It also expects more advanced smartphones and the transition to '5G' wireless to underpin demand for wafers.
Broker Peel Hunt expects adjusted pre-tax profit of £20.2m in 2016, giving EPS of 3p (from £17.6m and 2.6p in 2015).
| IQE (IQE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 23p | MARKET VALUE: | £154m | |
| TOUCH: | 23-23.5p | 12-MONTH HIGH: | 27p | LOW: 16p |
| DIVIDEND YIELD: | nil | PE RATIO: | 8 | |
| NET ASSET VALUE: | 22p* | NET DEBT: | 16% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 75 | 6.9 | 1.6 | nil |
| 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 |
| % change | +2 | +270 | +1100 | - |
*Includes intangible assets of £86.8m, or 13p a share | ||||
