Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Orange. We currently have 8 research reports from 1 professional analysts.
Q1 revenues have grown organically by 0.8% yoy. This is quite a correct performance, in line with market’s expectations, and which confirms the good trend recorded in the previous quarter. Remember, revenues had increased by 0.3% during H1 16 and by 0.9% in H2 16. The great story in Spain continued apace with revenue growth of 8.5% yoy. In France, revenues were stable, the impact of roaming being offset by a clear improvement in the mobile trend while the fixed services grew by 1.6% yoy. Q1 EBITDA increased by 2% yoy. With no surprise, the group has confirmed its objective for 2017 of a higher EBITDA than in 2016 on a comparable basis (lifted by the strong commercial momentum supported by capex, and continuing efforts to transform the cost structure). As a reminder, the group will pay a dividend of €0.60 per share for 2016 and €0.65 for…2017.
Q4 revenues have grown organically by 1% yoy. This is quite a good performance, slightly better than the market’s expectations. Remember, revenues had increased by 0.3% during H1 and by 0.8% in Q3. As in Q3, growth was remarkable in Spain (+7.9%), led by mobile services and mobile equipment sales, while the growth in fixed broadband continued to be strong with the success of fibre (1.45m customers at end 2016). In France, revenues declined by only 0.8% yoy, the impact of roaming being completely offset by a clear improvement in the mobile trend. Q4 EBITDA rose by 4.6% yoy (corresponding to a margin of 31.3%), tied to revenue growth and a reduction in labour expenses (with the average number of full-time equivalent employees falling 2.8% in the quarter). This is a good performance as it was merely stable during H1. With no surprise the group has set an objective for 2017 of a higher EBITDA than in 2016 on a comparable basis (lifted by the strong commercial momentum supported by capex, and continuing efforts to transform the cost structure). With no surprise, the group will propose the payment of a dividend of €0.60 per share for 2016 but of €0.65 for…2017.
Q3 revenues have grown organically by 0.8% yoy. This is quite a good performance, slightly better than the market’s expectations. Remember, revenues had increased by 0.3% during H1 (they were even stable in Q2). Growth was remarkable in Spain (+7.8%), led by mobile services and mobile equipment sales, while the growth in fixed broadband continued to be strong with the success of fibre (1.4m customers at end September). In France, revenues declined by only 0.6% yoy, the impact of roaming being completely offset by a clear improvement in the mobile trend. EBITDA rose by 1.6% yoy to €3.6bn (corresponding to a margin of 31.3%), mainly tied to revenue growth: a good performance as it was merely stable during H1. The group has confirmed the objective for the full year of a higher EBITDA in 2016 than in 2015 on a comparable basis. With no surprise, the group plans to propose the payment of a dividend of €0.60 per share for 2016.
Q2 revenues were perfectly stable yoy after rising 0.6% in Q1. They were indeed in line with expectations and over and above the decline in national roaming in France and the first effects of the new roaming regulation in Europe. They confirm the gradual improvement in Orange’s activities, in particular in Spain (+6.2% organically after +1.8% in Q1).
As in the two previous quarters, Q1 revenues rose organically by 0.6% yoy. They were in line with expectations and confirm the gradual improvement in Orange’s activities, in particular in the France Enterprise activities (+2.1%) and Spain (+1.8% organically). But also like in the previous quarters, the EBITDA grew by 0.3% yoy (excluding the €50m impact of the employee shareholding operation for the Ambition 2016 programme). The halt in declining revenue was accompanied by a significant decrease of nearly 2% yoy in labour expenses (but restructuring expenses amounted to €113m vs €14m a year ago). Remember that Q1 EBITDA at €2.57bn corresponds to a margin of 25.7%, which is not significant for the whole year. Because the group is listed in the US, it had to apply IFRIC 21 in 2014, i.e. earlier than most other French and European groups for which the compulsory application was 2015. To align with the standard practice which emerged during Q1 15, Orange has modified its IFRIC 21 accounting approach in its interim accounts and the annual costs of the IFER and property taxes (€533m) are now accounted when the obligation event occurs (i.e. on 1 January). The group has confirmed the objective for the full year of higher EBITDA in 2016 than in 2015 on a comparable basis. The group has also confirmed the payment of a dividend of €0.60 for 2015. An interim dividend of €0.20 was paid on 09/12/2015 and the balance of €0.40 will be paid on 23/06/2016. The group plans to pay a dividend of €0.60 for 2016. Capex rose by 10.4% in Q1 (it had already risen by 9.3% for the whole year 2015) and represented 14.6% of revenues. This is in line with Orange’s 2020 strategic plan: investment in fibre rose sharply (+55% yoy), mainly in Europe and particularly in France. Remember Orange has presented its new strategic plan for 2015-18. In France, Orange will triple its investments in fibre and increase the number of connected homes from 5.5m at end March to 12m in 2018 and to 20m in 2022. In Spain, the group will also expand its fibre network and its TV offering, aiming (with Jazztel) to reach 10m connectable homes in 2016 (7.4m connected at end March) and 14m by the end of 2020. In Poland, more than 4.7m households were eligible for VDSL at end December, and 818k households had fibre connectivity at 31/03. Note also Orange is the 4G leader in France with coverage of 81% of the population at end December. A 4G coverage which reached 87% of the population in Spain, 89% in Poland, 99% in Belgium, 72% in Romania, 65% in Slovakia and 84% in Moldova. In addition, 4G is deployed in Botswana, Jordan, Morocco, Mauritius, Cameroon and Guinea-Bissau. Remember also the group has laid the foundations for its future mobile banking services by signing an agreement that will allow it to take a stake of 65% in Groupama Banque, which will become Orange Bank.
As in the previous quarter, Q4 revenues rose organically by 0.3% yoy (excluding regulatory measures). They were in line with expectations and confirm the gradual improvement in Orange’s activities, in particular in France (+0.3% vs -0.1% in H1) and Spain (-0.6% vs -2.1% in H1). But also like the previous quarter, the good news is that EBITDA grew by 1.4% yoy (vs +1.1% in Q3 excluding regulatory measures while it was only perfectly stable yoy in H1). The halt in declining revenue was accompanied by a significant decrease of 1.8% yoy in labour expenses (note the average number of employees declined by 4% yoy). With an EBITDA of €12.43bn, the group has eventually beaten the target of €12.3bn in EBITDA for the full-year 2015 it had given after the Q3 results (including the integration of Jazztel and Meditel) and which corresponded to the top end of the target range announced at the beginning of the year for the previous scope of operations. Capex rose by 14% in Q4 (and by 9.3% for the whole year) and represented 16.1% of revenues for the whole year. This is in line with Orange’s 2020 strategic plan: investment in fibre rose sharply (+55% yoy), mainly in Europe and particularly in France. Remember Orange has presented its new strategic plan for 2015-18. In France, Orange will triple its investments in fibre and increase the number of connected homes from 5.1m at end December to 12m in 2018 and to 20m in 2022. In Spain, the group will also expand its fibre network and its TV offering, aiming (with Jazztel) to reach 10m connectable homes in 2016 (6.8m connected at end December). In Poland, more than 4.7m households were eligible for VDSL at end December, and 716k households had fibre connectivity at that date. Note also Orange is the 4G leader in France with coverage of 80% of the population at end December. A 4G coverage which reached 85% of the population in Spain, 84% in Poland, 99% in Belgium, 72% in Romania, 65% in Slovakia and 84% in Moldova. In addition, 4G is deployed in Botswana, Jordan, Morocco, Mauritius, Cameroon and Guinea-Bissau. For 2016, Orange aims for a restated EBITDA higher than in 2015 on a comparable basis. This objective will be supported by continued efforts to reduce the cost structure. The group confirms the payment of a dividend of €0.60 per share for 2015 and … 2016. As expected, Stephane Richard confirmed that at the start of the year discussions had resumed with the Bouygues Group with the aim of a business combination with Bouygues Telecom. “These discussions are ongoing and require at least several weeks before any decision is taken.”
As in the previous quarter (+0.4% yoy), Q3 revenues rose organically by 0.6% yoy (excluding regulatory measures) after falling by 0.3% in Q1. They were slightly better than expected and confirm the gradual improvement in Orange’s activities, in particular in France and Spain. Note that the full consolidation of Jazztel in Spain and Meditel in Morocco contributed €430m in term of revenues (corresponding 4.4% of Orange's global revenues). The good news is that EBITDA grew by 1.2% yoy (excluding regulatory measures) after declining by 1.2% in Q1 and growing by 0.9% in Q2. Labour expenses decreased by 1.7% (note the average number of employees declined by 4% yoy). The group is giving a new target of €12.3bn in EBITDA for the full-year 2015 including the integration of Jazztel and Meditel to be consolidated in H2. Note this corresponds to the top end of the target range announced at the beginning of the year for the previous scope of operations. Capex rose by 6.9% in Q3 (it has already risen by 6.5% in H1) and represented 15.1% of revenues. This is in line with Orange’s 2020 strategic plan: investment in fibre rose sharply (+57% yoy), mainly in Europe and particularly in France. Remember Orange has presented its new strategic plan for 2015-18. In France, Orange will triple its investments in fibre and increase the number of connected homes from 4.3m at end June to 12m in 2018 and to 20m in 2022. In Spain, the group will also expand its fibre network and its TV offering, aiming (with Jazztel) to reach 10m connectable homes in 2016. Orange has also an ambitious plan to deploy its own fibre network in Poland.
Q2 revenues rose by 0.4% yoy (excluding regulatory measures) after falling by 0.3% in Q1. They are slightly better than expected and confirm the gradual improvement in Orange’s activities, in particular in France and Spain. The other good news is that the EBITDA grew by nearly 1% yoy (excluding regulatory measures) after declining by 1.2% in Q1. Indirect costs fell by €156m in H1 with labour expenses decreasing by 0.9% (note the average number of employees declined by 4% yoy). The group is maintaining its target of €12bn in EBITDA for the full-year 2015 (this does not include the integration of Jazztel and Meditel which will be consolidated in H2). Capex (€2,672m in H1) increased by 6.5% and represented 13.7% of revenues. This is in line with Orange’s 2020 strategic plan: investment in fibre rose sharply (+74% yoy), mainly in Europe and particularly in France. Remember Orange has presented its new strategic plan for 2015-18. In France, Orange will triple its investments in fibre and increase the number of connected homes from 4.3m at end June to 12m in 2018 and to 20m in 2022. In Spain, the group will also expand its fibre network and its TV offering, aiming (with Jazztel) to reach 10m connectable homes in 2016. Orange has also an ambitious plan to deploy its own fibre network in Poland. Net debt was €26.4bn at 30 June 2015, nearly stable in relation to end 2014. The ratio of net debt to EBITDA was 2.13x at 30/06/2015. In H2, net debt will be impacted by the consolidation of Jazztel and by the disbursement of the acquisition price of €3.4bn. In all, this should temporarily increase the ratio of net debt to EBITDA slightly, to about 2.2x at the end of 2015. This change is consistent with the objective of a ratio of around 2x in the medium term, in view of the disposal of the EE joint venture to come (note that in our model we include the cash from this disposal in 2015).
Research Tree provides access to ongoing research coverage, media content and regulatory news on Orange. We currently have 8 research reports from 1 professional analysts.
CyanConnode* (CYAN): Leader of the narrowband (CORP) | Ideagen* (IDEA): Consistent strength in delivery (CORP) | K3 Capital* (K3C): Director changes (CORP) | Lighthouse Group* (LGT): Trading update (CORP) | Somero Enterprises* (SOM): Strong June trading shows a pick-up in US market activity and affirms FY forecasts (CORP) | Castleton Technology* (CTP): Solid prelims (CORP) | Cello (CLL): Strengthening the offer in Health (BUY) | dotDigital* (DOTD): Yet again – positive trading update (CORP) | Allergy Therapeutics* (AGY): FY trading update drives 7% upgrade (BUY)
Companies: CYAN IDEA K3C LGT SOM CTP CLL DOTD AGY
Tristel* (TSTL): Trading update drives upgrades (CORP) | Cello (CLL): On track and investing for growth (BUY) | The People’s Operator* (TPOP): Board changes (CORP) | Tax Systems* (TAX): Trading update: on track (CORP)
Companies: TSTL CLL TPOP TAX
The AIM market turned twenty-two in June and it is fair to say it has had its fair share of difficultiesH1 2017 saw a further net loss of constituents and we ask what will the rest of 2017 hold in store. Arguably the stability of the UK government, Brexit and the shift in global monetary policy will be the biggest themes for the remainder of the year.
Companies: IDP PEG AMYT SOU EVRH TST VANL W7L G4M
Quiz—Sch 1 from the omni-channel and international own brand in the women's value fast fashion sector. Offer TBA. Expected late July. Last year Quiz posted sales of £87.4m while pre-tax profits grew by 17pc to £5.7m | Arena Events Group -provider of temporary physical structures, seating, ice rinks, furniture and interiors. Raising £60m. Mkt cap £63m. Expected on the Chef’s birthday. 25th July. | Altus Strategies—African focused natural resource Company. Offer TBC. Expected Mid July. | Harvey Nash Group— Provider of professional recruitment and offshore solutions moving to AIM from Main. No capital to be raised. Mkt Cap c. £57.8m. | AnimalCare—RTO of Ecuphar NV, a European animal health company. £30m raise. Ecuphar FY16 rev £68.4m, underlying EBITDA £8.9m. Due 13 July. | NEXUS Infrastructure—£35m vendor sale. Mkt cap £70.5m. Provider of essential infrastructure services to the UK housebuilding and commercial sectors. Expected 11 July. FYSep16 rev £135.7m. | Greencoat Renewables - Schedule 1. Targeting a portfolio of operating renewable electricity generation assets, initially investing in wind generation assets in Ireland. Offer TBC. Due Mid July. | I3 Energy –Schedule 1 Update. Independent oil and gas company with assets and operations in the UK. Offer TBC, Mid July admission. | Verditek— Sch 1 update. The Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission late June | Rockpool Acquisitions—Northern Ireland based Company seeking strong NI acquisition with an international outlook. Raising £1.5m at 10p. Due 5 July. | Hipgnosis Songs Fund investment company offering pure-play exposure to Songs and associated musical intellectual property rights. Prospectus yet to be published. | Impact Investment Trust—Exposure to a diversified portfolio of funds providing SMEs across developing economies with the growth capital they need to have a positive impact on the lives of the world's poorer populations. Raising up to $150m at $1.00 | Residential Secure Income - social housing REIT raising up to £300m Admission due c.12 July. | Curzon Energy—Report on Proactive Investors of intended LSE float this year with acquisition of coal bed methane assets in Oregon. Looking to raise £3m plus. | NLB Group—financial and banking institution based in Slovenia, with a network of 356 branches. Seeking Ljubliana Stock Exchange listing with GDRs on the LSE. Expected mid June. | Kuwait Energy— has not been able to complete its initial public offering as announced in its Intention To Float of 3 May 2017. However, in light of positive feedback from potential investors, the Company remains committed to obtaining a London listing and continues to explore its options. | Supermarket Income REIT– Up to £200m raise to acquire a diversified portfolio of supermarket real estate assets in the UK, providing long-term RPI-linked income. Due 21 July.
Companies: EOG MERC EHP DTG FLK AGQ HAYD PROX ADT OPP
Amino’s H1’17 results on Tuesday showed continued momentum in both device sales and recurring software revenue, leaving the group very well placed to achieve our full year expectations. Trading in the first half benefitted from a healthy FX tailwind but we were encouraged to see double digit underlying constant currency growth in both key revenue segments. Net cash at May’17 of £13.1m benefitted from a large working capital inflow, which we expect to reverse in H2, however the group still has plenty of firepower for further earnings enhancing acquisitions. We leave our full year forecasts essentially unchanged but see scope for outperformance in the second half. We retain our 243p target price and Buy recommendation.
Companies: Amino Technologies
On balance, most concluded he had been slightly more dovish than expected. ECB President, Mario Draghi, certainly did a good job in keeping the markets guessing during his Central Bank's Monetary Policy Statement and press conference yesterday afternoon. But in saying "We were unanimous in setting no precise date for when to discuss changes in the future," and going on to point out "In other words, our discussions should take place in the Fall, or in the Autumn, since we are in Europe", he appears to have ruled out the opportunity for next month's Jackson Hole Symposium to be his platform for the big announcement. Whilst he is simply putting off the inevitable, Draghi's insistence that "Inflation is not where we want it to be or where it should be", while also voicing commitment to bolster the bond buying programme should it be necessary, the 'can' now appears to have been kicked down the road to either the September or October meetings. This all left the US in a rather anticlimactic mood, having already received mixed macro news inputs as the Labor Department reported a fall in weekly first-time unemployment claims, while the Federal Reserve Bank of Philadelphia released a report showing that regional manufacturing activity grew at a notably slower rate in July and the Conference Board said its index of leading indicators rose by more than expected for the month of June. With a Bloomberg report suggesting the investigation into association between Trump's Campaign and Russia was also to be extended into his business dealings, the three major averages drifted downward shortly after the opening on profit taking, going on to traded fractionally either side of unchanged for the remainder of the session. Reporting majors Travelers and American Express both weighed on the Dow Jones after releasing dull second quarterlies, while Best Buy and Home Depot were hit after Sears said it would start selling its Kenmore line of refrigerators and stoves on Amazon.com; Trucking, Railroad, Telecom, and Steels also all met modest selling. Post-close, Microsoft firmed 0.9% in after-hours trading, on reporting that its quarterly profits had more than doubled, boosted by strong demand in its cloud operations plus tax benefits. So far, the Wall Street's Q2'2017 earnings have tended to surpass consensus expectations, which presently appears to be the principal bull support for equity indices which remain at or close to their record highs. Treasuries found demand as the ECB deflated some concerns over an early shift toward reducing monetary stimulus. The yield on the benchmark ten-year note fell as low as 2.239%, before settling virtually unchanged at 2.266%. Crude prices rose to a seven-week high Thursday, with the international benchmark Brent touching the $50/barrel level for the first time in more than a month during US hours, although this succumbed to profit taking late in the session and crude went on to decline fractionally during Asian trading. Traders eyeing the recent decline in US stockpiles, will be sensitive to this evening's weekly US Oil Rig Count data and Monday's meeting of OPEC delegates to review an extension to existing production cuts and discuss now also including Libya and Nigeria into the agreement. Following recent strength coming from Bank of America Merrill Lynch's bullish stance on Asia-Pacific equities, the region's markets appear to have somewhat run out of steam this morning. Just ahead of their close, most had made just fractional moves with only the S&P/ASX-200 showing a reasonable decline with its export plays being pressurised by the AUS$'s recent strengthening against the US$, while weak Energy stocks also kept the Nikkei pointing downward. European shares started on a positive note yesterday, following new record highs amongst the principal US indices on Wednesday and a firm closing of Asian trading first thing Thursday morning. This was further bolstered by strong earnings reports from media heavyweight Publicis and consumer giant, Unilever (ULVR.L). The STOXX 600 peaked almost 0.5% higher immediately before the ECB president spoke, but then collapsed into the red where it remained following the US's lacklustre opening. The Euro dipped slightly during this morning's Asian session, having extended recent gains to hit its highest level against the US$ since August 2015 yesterday. The IMF Board this morning has reportedly accepted Greece's latest bailout plans 'In Principle', while an earthquake in the county resulted in 2 deaths and multiple casualties. By comparison, the FTSE-100 opened in the positive yesterday, going on to rise further on receipt of better than expected June retail sales data and then just blipped modestly on the ECB statement, to close with a good 0.77% gain on the day. The highly international index benefitted from a further sharp fall in Sterling as the EU's Chief Brexit Negotiator, Michel Barnier, highlighted continuing "fundamental" differences over the issue of citizen rights and willingness to recognise obligation to pay exit bill that remained. Amongst individual stocks, Sports Direct (SPD.L) rallied as full year profits highlighted the damage Sterling's devaluation had inflicted to its full year profits, while easyJet (EZJ.L) led a round of profit taking amongst European airlines. There are limited macro releases due today. The UK details just its Public Sector Net Borrowing for June, while nothing is due form the EU and the US provides its Baker Hughes US oil Rig Count. UK corporates due to provide earnings or trading updates include Vodafone (VOD.L), Homeserve (HSV.L), Close Brothers (CBG.L), AO World (AO..L), Acacia Mining (ACA.L), Record (REC.L), Beazley (BEZ.L) and Capital & Counties Properties (CAPC.L). Majors reporting in the US later today include General Electric and Honeywell. Lacklustre overnight markets bode for a similar European opening this morning, with the FTSE-100 seen trading between 0 to 10 points down in early business.
Companies: EZJ HWDN UKOG ULVR
Post BT Group’s FY-17 results back in May, which highlighted on-going regulatory and pricing pressures and was accompanied by BT lowering its guidance for FY-18 to that of a “flat” outlook with only a “progressive” dividend, BT stock fell heavily. It reached an excessively undervalued point at around 285p per share in July, which we highlighted on 14 July, whereby fears over regulation on BT Openreach had become far too bearish we believe. Since then, BT stock has rallied sharply, correcting the excessively undervalued position. It remains undervalued now, but less so, and we see no near term catalysts to change this. We therefore downgrade our recommendation to Long term Buy (Buy) , retaining our target price of 340p.
Companies: Bt Group
Q2 revenues and EBITDA have both increased by 13% yoy thanks to the consolidation of Starman and Santa Monica Networks (completed in April). Adjusted for these acquisitions, revenues and EBITDA were, however, up by c.3.5%, a quite correct performance in a mature and competitive Finnish market.
Companies: ELISA OYJ
Amino has reported H1 17A results ahead of management’s expectations, and a closing net cash position (£13.1m) confirmed as having more than doubled over FY 16A. Key metrics saw impressive growth, with turnover and adjusted EBITDA up 21% and 70% respectively. IP device sales were strong, particularly in the Americas. In software, the group continues to report positive momentum. We leave earnings estimates unchanged at this stage and believe the maintained progressive dividend policy (+10% y/y) continues to demonstrate management’s confidence in the outlook.
Companies: Amino Technologies
Forbidden Technologies plc (FBT.L, 5.75p/£10.4m) North American pilot opens multiple potential opportunities (12.07.17) | CloudCall plc (CALL.L, 120p/£24m) H1 trading update: accelerating growth and positive KPIs (12.07.17) | Amino Technologies plc (AMO.L, 193p/£138m) Interims: Enable provides interim upgrade and new sales route (11.07.17) | Falanx plc (FLX.L, 7p/£8.8m) Prelims: Increased push into cyber security (10.07.17) |
Companies: FBT CALL CCT AMO FLX
The company has announced a further positive financing development with the securing of $100m of Super Senior Debt with a coupon of 7.5% that provides a significant reduction in interest payable on around 10% of outstanding gross debt. The recent trading updates are less positive and we have reduced our expectations accordingly. In addition, we still await a launch date for HYLAS 4 which is a crucial factor in attaining the required revenue and cash flow development. The fair value for the equity falls to 93p from 109p previously with our longer-term assumptions unaltered.
Companies: Avanti Communications Group
Enterprise-focused niche applications of tech illustrate how, while trends appear to be fluctuating away from the current poster children of fintech and the Internet of Things, in fact these developments are refining appropriate application of existing technologies.
Companies: 7DIG AMO ARTA BVC BOTB CTP CFHL ISL DTC DOTD ELCO ESV FDSA FDEV GBG IDEA IDOX IMTK IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET ONEV PHD QTX QXT RCN 932 SSY SEE SIM SPE TAX TEP TPOP TRAK UNG VIP ZOO
We recently hosted our annual Industrial Technology dinner with 14 companies, many of which are active in the materials science arena; having focused previously on composite materials in the aerospace sector, in this edition of Machinations we focus on graphene, with its unique and potentially game-changing qualities and potential applications. Investments in this area remain fairly early stage, but could potentially reap huge rewards. Graphene is well represented in the UK small-cap market by several players.
Companies: SIXH ACL AXS AMPH ALU AEP AVG CAPD CAR FENR FLO RAD GHH HDD HAYT IOF MPE RE/ RED RNO RBN SOM SCE TRT TRI VANL ZAM
CyanConnode is a global leader in designing and deploying narrowband Internet of Things (IoT) solutions, principally using its RF mesh networking technology. It offers better performance for lower total cost of ownership than rivals, with easy deployment and secure IP-based machine-to-machine (M2M) communication. It has spent many years and £30m developing narrowband RF mesh networking technology and commercialising it in a world-class, award-winning narrowband IoT platform enabling M2M interface for smart-city or IoT applications, including smart metering and smart lighting. The business model currently focuses on volume hardware deployment together with recurring software licences per device, migrating to a licensing/royalty model as volumes increase and improving gross margin. Once a utility has borne the heavy cost of a network deployment, it is likely to be kept for many years and can now be upgraded for new IoT applications; leading to years of recurring high-margin licence fees.
Interims highlight strong gross margins with the benefit of revenue mix effects. A very strong first half has delivered £6.9m adjusted PBT (+64% vs 1H16 and representing 63% of FY expectations) from revenue of £39.9m (representing 51% of FY expectations). As revealed at the trading update, very strong cash generation from unusually beneficial working capital movement led to period end cash of £13.1m (FY16: £6.2m). Despite 21% organic revenue growth and a strong order book, timing of large orders in 2H remains elusive to predict but with evident 1H margin expansion from previous expectations we trim FY revenue growth forecasts 5% with no effect on full-year gross profit, EBITDA and cash. The stock remains cheap, cash generative, and growing, with a dividend yield above 3.5%. Target 260p reiterated, with likely upward pressure on forecasts and target price as the revenue mix evolves in improving scale and profitability.
Companies: Amino Technologies