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Amino: customer delays and price rises

The IP TV specialist's shares take a battering on the back of a disappointing trading update
October 11, 2018

A disappointing trading update from Amino Technologies (AMO) sent shares in the internet protocol (IP) TV specialist plunging more than 30 per cent.

IC TIP: Buy at 132p

The group, which provides tech hardware and software services to network operators, expects adjusted pre-tax profits for the year ending November 2018 to come in at around $11.5m – “reflecting an intensification of external macroeconomic headwinds”. This compares with house broker FinnCap’s previous estimate of $15.5m – a considerable downgrade. Analysts here have cut their adjusted EPS forecasts from 19.2¢ to 14.2¢ for FY2018 and their target price from 275p to 260p.

What happened? Amino cited delayed customer decisions on orders in the second half due to instability in the economies of some emerging markets. And planned trade tariffs in the US have engendered confusion among customers, even though these don’t yet affect Amino’s products directly. Moreover, component prices rose in the second half, and are expected to continue rising “in the near future”.

However, net cash is expected to improve against the May half-year-end position of $15m. And, reassuringly, management still plans to raise the full-year dividend by at least 10 per cent – maintaining this level for at least two more years.