Amino has announced that macroeconomic headwinds affecting the business have intensified, and the company expects higher than anticipated component prices in H2 2018E. Management have adjusted their expectations for FY 2018E profits, with adjusted PBT expected to be c$11.5m. We take the company’s cue and reduce our forecasts accordingly. On a more positive note, cash performance remains strong, and management has confirmed its intention to increase the FY 2018E dividend by no less than 10%, with this level of dividend to be maintained to FY 2020E.
Today’s announcement reveals that Amino is experiencing macro-headwinds from three sources: 1) planned trade tariffs in the US, 2) instability in certain emerging market economies and 3) uncertainty in the IPTV marketplace generally, caused by the current dramatic rate of change. The result of these headwinds is a slowdown in orders. As a consequence, management expect FY 2018E adjusted PBT to be c$11.5m.
Management also disclosed their expectation for component prices to continue to increase in the near term. As we noted in previous research1 , unfavourable trends in component pricing have been a feature of recent news flow from a number of industry players, including Arris and Technicolor, as well as Amino.
Following the announcement, we take the company’s cue and make revisions to our forecasts. FY 2018E adjusted PBT is reduced by 26% to $11.5m; given the lack of certainty around any near-term recovery, and the comment around expectations of further component price pressure, we also downgrade FY 2019E by c.32% to $11.6m.
The announcement confirms that cash flow remains strong, with FY 2018E closing net cash expect to be higher than the $15.0m H1 2018A figure. We forecast FY 2018E closing net cash at $18.1m, $3m up on the H1 balance.
In a sign of confidence in the longer-term outlook, management have confirmed their intention that the FY 2018E dividend will grow by no less than 10% and this level of dividend will continue for no less than the next two years, i.e. the periods up to and including FY 2020E.