In our view, today’s trading update from Amino reassures on the FY 18E financial outcome. Revenue and adjusted PBT are expected to be in line with market expectations, and cash generation remains strong. Furthermore, the 10% FY 18E dividend growth target has been reiterated. We make no changes to forecasts following the announcement and await detailed commentary on FY 18E business performance in the full-year results announcement scheduled for 5 February 2019.
The announcement confirms management’s expectation that the FY 18E revenue and adjusted PBT outcomes will be in line with market expectations. We forecast $90.8m and $11.5m respectively and believe both to be in line with market consensus.
Strong cash generation has long been a core Amino strength in our view, and the trend has continued in the current financial year. Whilst the release contains no detail on cash flow, the closing FY 18E net cash position was confirmed at $20.3m, c18% of the current market capitalisation. This is $2.2m ahead of our forecast and a $2.9m improvement over FY 17.
Management re-iterated their target of 10% dividend growth for FY 18E, with the dividend level to be at a minimum, maintained in absolute terms in the following two years. Note we expect DPS of 7.3p for FY 18E and FY 19E.
Following the somewhat disappointing October 2018 trading update, in our view today’s announcement gives confidence in the FY 18E financial outcome and also management’s ability to effectively manage the business against a currently challenging market backdrop. We believe the reiteration of the dividend target is a sign of the Board’s confidence in the outlook and sentiment should also benefit from CommScope’s proposed acquisition of Arris (announced November 2018). Although Arris typically serves a different client base to Amino, the business has a notable presence in a number of Amino’s core markets.