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Quixant proves sturdy in second half

Investor concerns that the second half of 2017 would not be as strong as the first have been swept aside by another excellent set of annual results
March 22, 2018

Novomatic is Europe’s largest casino machine maker. It has a presence in 45 countries, manufactures some of the world’s most popular gambling machines, and is now coming to Quixant (QXT) for technology hardware. The Aim-traded computing platform specialist has shipped its first volumes to Novomatic and to a major new client in Japan – a market which is expected to boom if casinos are legalised.

IC TIP: Buy at 411p

Quixant’s high tech computer boards and its recent expansion into gaming monitors are helping it nab business from competitors. The group’s market share exceeded 10 per cent in 2017, as revenues in its gaming business leapt 34 per cent to $71m (£51m). With the high-margin gaming revenues contributing a higher proportion to the top-line than some brokers had expected, organic pre-tax profit growth (28 per cent to $17.7m) came in ahead of forecasts. FinnCap has therefore upgraded its estimates for 2018 and now expects pre-tax profits of $19.4m, giving EPS of 24.6ȼ (2017: $17.7m and 22.9ȼ).

More impressive is the group’s ability to generate cash. Net cash inflows were $2.3m in 2017, despite one-off costs associated with a supplier issue, continued investment in product development, and dividend commitments.

QUIXANT (QXT)   
ORD PRICE:411pMARKET VALUE:£ 271m
TOUCH:401-420p12-MONTH HIGH / LOW:483p355p
DIVIDEND YIELD:0.6%PE RATIO:29
NET ASSET VALUE:72ȼ*NET CASH:$4.5m
Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (ȼ)Dividend per share (p)
201324.26.07.81.0
201431.97.19.51.2
201541.87.89.91.5
201690.411.714.32.0
201710915.020.02.6
% change+21+29+40+30
Ex-div:11 May   
Payment:18 May   
*Includes intangible assets of $14.3m, or 22ȼ a share   £1=$1.41