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Acquisition boosts growth at Quixant

The gaming hardware and software company has benefited from its recent acquisition
March 24, 2017

When casino machine tech specialist Quixant (QXT) joined Aim in 2013 its major customer, Ainsworth, accounted for almost all of its revenues. Today Ainsworth contributes just a fifth to the top line thanks to the addition of new platform customers and expansion into gaming monitors. Plus Ainsworth has recently been acquired by market leader Novomatic, sparking speculation that this behemoth of the casino machine world may soon be turning to Quixant for more of its hardware and software needs.

IC TIP: Buy at 383p

But it's not just this speculation that is getting Quixant's investors excited. The group's 2015 acquisition, monitor business Densitron, contributed $37.4m (£29.9m) of revenue last year, while the existing business also steamed ahead, with revenues up 45 per cent to $53m.

Profit growth is also impressive, and broker FinnCap expects adjusted pre-tax profits and EPS of $15.8m and 18.5ȼ, respectively, for 2017 (up from $13.8m and 16.4ȼ in 2016).

With $10m of cash generated from operations, Quixant has paid off all the debt it took on to fund the Densitron acquisition and FinnCap expects the group to be in a net cash position by the end of 2017. This suggests more acquisitions could be on the cards. If so, we've got our eyes on fellow Aim group Zytronic (ZYT), which specialises in touch screens, another potential growth area in the casino machine market.

QUIXANT (QXT)

ORD PRICE:383pMARKET VALUE:£250m
TOUCH:375-390p12-MONTH HIGH / LOW:383p186p
DIVIDEND YIELD:0.5%PE RATIO:33
NET ASSET VALUE:52ȼ*NET DEBT:0.2%

Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (ȼ)Dividend per share (p)
201221.65.06.9nil
201324.26.07.81.0
201431.97.19.51.2
201541.87.89.91.5
201690.411.714.32.0
% change+116+50+44+33

Ex-div: 13 May

Payment: 18 May

*Includes intangible assets of $14m, or 21ȼ a share £1=$1.25