Amino Technologies; Disappointing trading statement!

14th Jun '13 by johnrosier

2 comments 5844 reads

Amino Technologies (87p and 3.0% of JIC) I have bought a holding 3% holding this morning. I was alerted to the stock in Shares magazine and on further investigation it does indeed seem good value.

It designs and manufactures set top boxes. The following is from its website;

"Amino innovates – developing new products and platforms to enable operators to deploy quality, value-added services that drive customer retention and growth. With over four million devices sold, our award-winning IPTV solutions are deployed worldwide by major global, regional and local operators and service providers. They rely on us for our deep IPTV technology expertise, global ecosystem partnerships and our proven deployment experience. Underpinning our quality IPTV solutions – recently acknowledged as global leader in price and performance – are a clear set of values: Innovation: with a number of industry “firsts” – and awards - we constantly seek new ways to develop and deliver powerful new IPTV solutions to our customers
• Trust: our customers rely on us to deliver quality products on time - every time. Our experience, strong IPTV technology focus and heritage give us the capability to work across a wide range of deployments
• Value: “total cost of ownership” – the combination of reliability, compliance, hardware and software quality – is one of our clear differentiators and highly valued by our growing customer base
• Insight: our global deployment experience – and extensive in-depth ecosystem partnerships – gives us unique insights into the challenges our customers face, providing specialist advice and support

Its latest trading statement issued on 6th June was encouraging with it saying that it expected to "deliver a profit in the first half of the year which is significantly ahead of the prior year (H1 2012: £0.2m)." Cash at 31st May stood at £18.2m compared to £13.9m a year ago.

Valuation is attractive on a number of metrics; It is valued at 13.9x November 2013 earnings for 13% growth and 12.3x Nov 2014 for a further 13% growth. Its enterprise value of £29m (£47m market cap - £18m cash) compares with sales of £43m forecast for November 2013. It is highly cash generative, generating free cash flow of 7.65p per share in the last year putting the shares on price/free cash flow of 11.3x. It has stated that it intends to increase dividends by at least 15% both this year…

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johnrosier

15th Jul '13

Amino Technologies (90.5p and 2.9% of JIC portfolio); Interim results for the six months ending 31^st May confirms the progress it outlined in its 6^th June trading statement. Turnover was flat year-on-year at £20.1m, operating profits before exceptional items came in at £1.7m compared to £0.2m in H1 2012 and at 31^st May it had net cash of £18.2m, up 32% on the £13.9m in the prior year. Gross margins improved by 10.8 percentage points 46.2% compared to 35.4%. The interim dividend is set at 1p and the Chairman re-affirms the previously announced dividend policy of increasing the annual dividend by 15% both this year and next.

The Company says that it has benefitted from shortening lead times, which has helped secure customer wins and that its lower specification products has secured important contract wins in emerging markets. It also benefited from its “win back” campaigns in North America.

The outlook statement is upbeat with the Chairman saying that the Company is well placed to continue its growth strategy and results for the full year will be in line within expectations.

Conclusion; I bought the holding on 14^th June, since when it has risen by about 3%. There is nothing in these results which make me want to change my mind; it seems to be making good operational progress, the balance sheet is strong and its valuation remains attractive. It is valued at 13.9x November 2013 earnings for 13% growth and 12.3x Nov 2014 for a further 13% growth. Its enterprise value of £32m (£50m market cap - £18m cash) compares with sales of £43.5m forecast for November 2013. On current forecasts, its dividend yield is 3.9% for the current year and 4.4% for the year ending November 2014. Happy Holder!

www.JohnsInvestmentChronicle.com

25th Nov '13

Amino Technologies (95.5p and 2.8% of JIC) has issued a trading statement this morning ahead of its financial year end on 30th November. It says that profits should be in line with forecasts for the current year and that it should have year-end net cash of £19m. However, it says that during the second half there has been a change in mix with it selling more of its low end set top boxes and has had reduced levels in demand from an unnamed customer. Slightly worryingly it says that it expects these trends to continue into 2014 to the extent that revenue is likely to be flat year-on-year. More encouragingly it says that its profit and cash expectations for the year ending November 2014 remain unchanged. As a sign of confidence it is recommending a full year dividend of 3.45p for the current year, (a 15% increase), and expects to increase next year’s dividend by “no less than 15%”.

Conclusion: I guess the drifty-drifty share price over the last few months was a clue that forecast upgrades were not on the way! It is not a disastrous trading statement by any means but I think it is difficult to see the shares making much progress until underlying trading accelerates. On 15.4x consensus forecasts for the year just ending, falling to 13.7x November 2014 for 11% growth it is not desperately cheap. The forecast yield of 3.6% rising to 4.2% in November 2014 is attractive as is the cash on the balance sheet. A difficult one as although it has some attractions, I struggle to see it performing from here. I would not buy the stock if I did not already own it and I think I will be using it as source of cash for better ideas!

Amino Technologies; Disappointing trading statement!

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Johnrosier

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