Telit Communications’ (TCM) half-year results reflected the benefits of the $105m (£85m) sale of its automotive division in February 2019. The group – an enabler of the ‘internet of things’ – swung into the black, thanks to a $57m boost from the disposal. The deal allows Telit to concentrate on the industrial 'internet of things' market, which it calls “the main driver of digital transformation for enterprises”. It also allowed for a considerable net cash position, following net debt of $34m as at December 2018.
A difficult component market and continuing US-China trade issues, meant Telit's gross margin shrunk from 33.6 per cent to 32 per cent as at June. The group is attempting to counteract such challenges by focusing on cost controls and the planning of a new production facility.
Meanwhile, management has intensified its focus on long-term evolution (LTE) and fifth-generation mobile (5G) products – and is ostensibly on track to present advanced samples of its latter product towards the end of this year.
House broker FinnCap expects adjusted EPS of 4.8ȼ for 2019, against a loss per share of 3.7ȼ in 2018.
| TELIT COMMUNICATIONS (TCM) | ||||
| ORD PRICE: | 170p | MARKET VALUE: | £ 225m | |
| TOUCH: | 168-170p | 12-MONTH HIGH: | 192p | LOW: 112p |
| DIVIDEND YIELD: | nil | PE RATIO: | 13 | |
| NET ASSET VALUE: | 98ȼ* | NET CASH: | $44.7m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
| 2018 | 202 | -12.8 | -9.1 | nil |
| 2019 | 191 | 58.1 | 35.0 | nil |
| % change | -5 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of $66.4m or 50ȼ per share£1 = $1.23 | ||||
