DiscoverIE (DSCV) secured two-thirds of its half-year revenues from its four target markets: renewable energy, transportation, medical, and industrial and connectivity. The electronics group’s design and manufacturing division is thriving in these spaces, providing more than 90 per cent of its design wins.
Three years ago, less than half of its turnover was derived from these markets. The group’s exposure to areas that are being “driven by structural changes” such as renewables, in the words of chief executive Nick Jefferies, have hardened discoverIE’s resilience to a turbulent industrial backdrop, as well as boosting its growth rates.
The remaining, non-core third of the group’s revenues are exposed to more cyclical industrial markets, Mr Jefferies admits. Custom supply work in the UK and Germany was slow. This vulnerability should be short-lived, though. Given the trajectory of its design wins, discoverIE’s target markets could provide over 80 per cent of its turnover in three to five years, its chief executive contends.
The group raised £60.6m in proceeds from two placings over the period, which helped to support £74m in expenditure on three acquisitions.
House broker Peel Hunt forecasts full-year 2020 pre-tax profits and earnings per share of £33.1m and 29p, respectively, rising to £37.9m and 31.7p in 2021.
| discoverIE (DSCV) | ||||
| ORD PRICE: | 530p | MARKET VALUE: | £ 470.1m | |
| TOUCH: | 526-530p | 12-MONTH HIGH: | 578p | LOW: 324p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 190p* | NET DEBT: | 33%** | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 212 | 7.8 | 7.40 | 2.80 |
| 2019 | 232 | 10.4 | 9.40 | 2.97 |
| % change | +10 | +33 | +27 | +6 |
| Ex-div: | 12 Dec | |||
| Payment: | 06 Jan | |||
| *Includes intangible assets of £133.3m, or 150p a share **Excludes lease liabilities of £17.9m | ||||
