IQE (IQE) gave us a flavour of what was to come with an upbeat trading statement in July, and results for the six months to June 2016 provided ample confirmation, thanks to increasingly diverse revenue streams and growing demand for semiconductors.
Sales in IQE's largest division, wireless, grew by 7 per cent and accounted for 69 per cent of group sales. What's more, IQE now has around 55 per cent of the global market. However a lull in mobile phone handset innovation over the past few years means that market growth is currently running at 5 per cent.
IQE has moved to offset this by boosting non-wireless revenue from 24 per cent of group sales to 31 per cent. Much of this growth relates to photonics - semiconductor applications that emit or detect light, essentially lasers and sensors - and sales jumped by 45 per cent, backed up by a strong pipeline of work for blue-chip customers with high-volume applications.
Work on other areas includes a hybrid compound semiconductor to overcome the performance limitations of using silicon. For example, silicon in solar panels only allows up to 20 per cent efficiency rates, while new materials (gallium nitride on sapphire) are on course to boost this to nearer 50 per cent.
Analysts at Peel Hunt are forecasting adjusted pre-tax profits for the year ending December 2016 of £18m and EPS of 2.7p (up from £17.6m and 2.6p in 2015).
| IQE (IQE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 28.25p | MARKET VALUE: | £190m | |
| TOUCH: | 28.25-28.75p | 12-MONTH HIGH: | 30.5p | LOW: 16p |
| DIVIDEND YIELD: | nil | PE RATIO: | 7 | |
| NET ASSET VALUE: | 25p* | NET DEBT: | 20% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 53.2 | 3.9 | 0.7 | nil |
| 2016 | 63.0 | 10.5 | 1.5 | nil |
| % change | +18 | +166 | +122 | - |
Ex-div: - Payment: - *Includes intangible assets of £96m, or 14p a share | ||||
