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Amino: temporary sales slump, as foretold

The technology group’s sales and profits declined in the first half, largely due to a change in a customer’s order phasing
July 18, 2018

At face value, Amino Technologies’ (AMO) half-year results look less than impressive. However, this was largely to be expected. The internet-protocol TV specialist had already communicated that a major customer was changing its order phasing – meaning Amino’s revenues would see a return to “normal seasonality” with a greater second-half weighting.

IC TIP: Buy at 199p

On a regional basis, the order-phasing shift hit performance in North America, while Latin American sales were broadly flat, although Amino enjoyed follow-on orders here and won a key contract with a major regional operator. Closer to home, European sales saw a recovery after a customer recommenced orders towards the end of last year.

The group has also been offsetting industry-wide pricing pressures around device components, including silicon and memory, although these did contribute to a slight dampening of the adjusted gross margin. These pressures look set to continue throughout FY2018. Further down the income statement, Amino’s pre-tax loss was exacerbated by $1.6m in exceptional costs – the result of consolidating its R&D centres from three down to two.

Even so, management reiterated its full-year guidance and upped the dividend. With 75 per cent of anticipated full-year revenues already secured, and a 40 per cent rise in the order backlog, shareholders are benefiting from enhanced top-line visibility. 

Broker finnCap forecasts adjusted pre-tax profits of $15.5m and EPS of 19.2¢ for the year to November 2018 (from $15.2m and 22.6¢ in FY2017)

AMINO TECHNOLOGIES (AMO)  
ORD PRICE:199pMARKET VALUE:£145m
TOUCH:197-200p12-MONTH HIGH:221pLOW: 176p
DIVIDEND YIELD:3.4%PE RATIO:20
NET ASSET VALUE:94¢*NET CASH:$15m
Half-year to 31 MayTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (p)
201749.86.38.61.530
2018**41.2-0.20.21.683
% change-17--98+10
Ex-div:09 Aug   
Payment:03 Sep   
*Includes intangible assets of $58.1m, or 80p a share. **In June 2018, Amino announced that it was changing its reporting currency from GBP to USD. £1=$1.32