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A cloud lingers over Telit

The ‘internet of things’ specialist also saw narrowing losses
A cloud lingers over Telit

Telit Communications’ (TCM) top line for 2018 was bolstered by $34.1m (£26m) in cloud and connectivity revenues – up by 23.1 per cent. Telit, a “global enabler of the Internet of Things”, also highlighted the “stabilisation” of its gross margin – one of the central aims of its turnaround plan. This came in at 32.6 per cent for 2018 – down from 35.1 per cent for 2017 as a whole, but up from 31.5 per cent in the second half of 2017.

IC TIP: Sell

Telit’s net debt figure is already outdated, given the $105m disposal of its automotive division in February 2019, but it was also opportune considering that trade payables were up by a fifth and borrowings totalling £45.2m are due for repayment in 2019. For house broker FinnCap – after this sale and Telit’s strategic review – it is a “changed business” under a new management team. This team includes chairman Paolo Dal Pino. He stepped into his current role on an interim basis last September, after Telit held discussions with major shareholders and reached a “separation agreement” with former chief executive Yosi Fait.  

Incorporating anticipated R&D costs, FinnCap has lowered its adjusted pre-tax profit estimates – now expecting $9m and EPS of 6.2ȼ for 2019, against losses of $4.1m and 3.7ȼ in 2018.

TELIT COMMUNICATIONS (TCM)  
ORD PRICE:164pMARKET VALUE:£ 216m
TOUCH:163-164.2p12-MONTH HIGH:180pLOW: 112p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:66ȼ*NET DEBT:39%
Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (ȼ)Dividend per share (ȼ)
201429413.910.6nil
201533315.912.36.0
201637017.913.47.4
2017375-56.8-41.9nil
2018427-39.8-27.9nil
% change+14---
Ex-div:na   
Payment:na   

*Includes intangible assets of $97m, or 74ȼ a share

£1 = $1.31