Shares in telecoms testing group Spirent Communications (SPT) were marked up slightly on the back robust half-year numbers to June. Development requirements relating to the fifth generation of mobile technology – ‘5G’ – underpinned continued growth in customer demand. Indeed, Spirent saw more than 60 new 5G-related wins across its portfolio.
Order intake climbed by 7 per cent, which Spirent attributed to progress across all divisions. True, orders for the networks and security business – which constitutes 60 per cent of the top line – were broadly flat. But the prior year’s first half benefited from US government expenditure on a one-off special project.
Orders for the lifecycle assurance business rose by just over a tenth to $49.4m (£40.8m), buoyed by the popularity of Spirent’s ‘Landslide’ and ‘VisionWorks’ offerings. Meanwhile, the group’s smallest business – connected devices – enjoyed an 18 per cent improvement, underpinned by various multi-year support contract renewals.
Spirent’s trading is typically second-half weighted, which management attributes to customer buying cycles. It means that significant cash is collected in the first half – though management notes that the respective period was particularly strong on this front. Cash generated from operations almost tripled to $57.2m.
UBS expects adjusted EPS of 11.2ȼ for 2019, against 10.3ȼ in 2018.
| SPIRENT COMMUNICATIONS (SPT) | ||||
| ORD PRICE: | 164.8p | MARKET VALUE: | £ 1.01bn | |
| TOUCH: | 164.6-165.6p | 12-MONTH HIGH: | 169p | LOW: 111p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 58ȼ* | NET CASH: | $142m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
| 2018 | 209 | 17.4 | 2.4 | 1.76 |
| 2019 | 217 | 18.7 | 2.7 | 1.94 |
| % change | +4 | +7 | +14 | +10 |
| Ex-div: | 08 Aug | |||
| Payment: | 06 Sep | |||
*Includes intangible assets of $160m or 26ȼ a share £1 = $1.21 | ||||
