Investors sent shares in Telit Communications (TCM) higher after management stood by its guidance of double-digit growth in both sales and adjusted cash profits this year. The wireless connectivity specialist posted higher sales across its territories and widened its gross margin, but infrastructure investments pushed up costs, sending adjusted operating profits down 17 per cent to $13.1m (£10m).
Telit's cellular, radio and location modules are used to track cars, monitor industrial equipment and link up consumer electronics. First-half trading suffered from the belated certification of its Cat-1 module by US carriers. By the end of the period, AT&T and Verizon were on board. Management also shelled out $14m for two acquisitions that have strengthened the group's range of security and Bluetooth products.
Sales of 'Internet of Things' or connected-device services leapt 23 per cent as Telit's comprehensive offering attracted blue-chip customers such as John Deere. German software giant SAP also signed up to resell the group's deviceWISE IoT platform, which connects production equipment to systems and applications. Broker Canaccord Genuity expects adjusted operating profits of $34.5m for the full year, giving EPS of 23¢, rising to $41m and 27¢ in 2017 (from $30.6m and 21¢ in 2015).
| TELIT COMMUNICATIONS (TCM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 279.5p | MARKET VALUE: | £321m | |
| TOUCH: | 278.75-279.75p | 12-MONTH HIGH: | 358p | LOW: 168p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 39 | |
| NET ASSET VALUE: | 98¢* | NET DEBT: | 26% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2015 | 156 | 8.7 | 6.4 | nil |
| 2016 | 166 | 4.7 | 3.5 | 2.50 |
| % change | +6 | -46 | -45 | - |
Ex-div: 18 Aug Payment: 23 Sep *Includes intangible assets of $105m, or 91¢ a share £1=$1.31 | ||||
