ZYT shares rise 5% after solid first half aided by currency tailwinds
Companies: Zytronic plc
Zytronic shares rose 5% on Tuesday after the AIM-listed tech firm said it had a strong half-year with trading in-line with expectations, and a 40% jump in pre-tax profits.
Group revenue rose 14% to £11.3m, with Touch revenues making up the lion's share at £10m. While pre-tax profit increased to £2.5m, a 40% increase on last year, aided by a 0.8% increase in operating profit margin.
Basic EPS also increased by more than 40% to 13.8p, resulting in a P/E of 15.1x earnings - marginally lower than the industry average of 16x.
The touch sensor manufacturer has enjoyed a near year-long 50% rally since after the Brexit vote last June crashed Sterling, boosting the small-caps topline.
N+1 Singer said the results showed strong PBT growth helped by an improving product mix and favourable currency impacts on the business. Analyst Jon Lienard said underlying trading remained positive:
"We retain our profit forecasts but see potential for upside if positive trading momentum continues. The balance sheet again continues to strengthen with net cash up to £12.5m and the interim dividend was increased by 10% to 3.80p. With underlying trading remaining positive, we continue to feel that an FY17 P/E rating of 15.6x is inexpensive for a growing technology business with a very strong balance sheet and a dividend yield approaching 4%."
Chairman Tudor Davies said the second half of the year had also started well and was in-line with expectations: "...on this basis we expect to make further progress in creating value for shareholders."
Analysts are forecasting c.£22m for FY17 revenues, with £4m in net profit, and a normalised EPS of 28.6p.