Amino Technologies: Stock Rank of 98 and down 20% in 4 months

15th Aug '17 by newbieinvestor

7 comments 4219 reads

As a newbie to the world of Stockopedia, and for my first post, I thought I'd gauge the thoughts of other, more experienced members, on the situation regarding Amino Technologies Amino Technologies (LON:AMO), in which I hold a long position.

Stockopedia rates it as a Super Stock, with a StockRank of 98.

The company states that:

“Amino is an IPTV innovator - developing new solutions to enable operators to deploy high quality value added services that drive customer retention and growth. We now offer a range of devices, content and home monitoring solutions for the connected home - drawing on over a decade of IP experience and expertise. With over seven million devices sold – and over 1,000 customers in 100 countries - our award-winning solutions are trusted by operators and service providers worldwide.”

It is the type of smaller company I like, with a Yield of c. 4%, and a low PE ratio of 12.9.

Its quality looks sound, and it has a wide moat, another attraction for me.

Financial Results:

On 11th July 2017, the company released its interim results for 6 months until 31st May 2017.

Highlights:

• Revenue growth of 21% to £40m, in line with management’s expectations
• Underlying revenue growth of 4% in constant currency, in line with management’s
expectations
• Gross margin increased to 44.5% from 43.6%, as a result of a higher proportion of mature
products sold in the period
• Adjusted profit before tax up 64% to £6.9m
• Adjusted basic EPS up 61% to 9.2p
• Adjusted cash generated from operations up 102% to £13m, representing 148% of adjusted EBITDA
• Net cash of £13.1m at 31 May 2017, up £6.9m since 30 November 2016, after paying final
dividend of £3.3m
• Increase in interim dividend to 1.530p per share, up by 10% year on year in line with the
Company’s stated progressive dividend policy, and representing the sixth consecutive year
the interim dividend has been increased
• Strong first half performance as anticipated, executing on entry order book
• Continued sales growth in North and Latin America with growing traction in the transition from cable to IP
• Launch of Enable™…

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willhampson

15th Aug '17

Good article! I also hold a smallish holding in Amino Technologies (LON:AMO). My take is that the recent slide can be attributed to a number of reasons. First, as you mention, there has been some fairly recent aggressive selling of pretty large stakes by connected parties, e.g. the connected legal person. I see the CEO bought a little the other day, but not much of a counter to the recent sells.

Second, I personally thought the half-year results were good but not stellar. The reason for that is a very large part of the growth was FX related since 95% of the group's revenue is transacted in USD. As such, headline revenue growth was 4% at constant currency. I suspect that prompted a number of people to take some profits given the rise over the last year.

Finally, it has gone ex-div fairly recently which will explain the gradual drop of late (although I accept it obviously doesn't account for the whole of it).On balance, I see this as a consolidation phase following some profit taking and will continue to hold. I will probably buy some more when it looks like momentum is gathering again.

sharw

Shortly after you posted Ben Hobson produced an article on top quality AIM companies and Amino came second:

http://www.stockopedia.com/content/how-to-hunt-for-high-quality-companies-on-the-alternative-investment-market-208533/

This is my largest holding so the recent slide has been a worry but I have put it down to liquidity. At the end of April a shortage of sellers caused a spike up to 220p. Now we have a surplus of sellers in the form of Miton and Azini depressing the price which in itself then triggers automatic stop-losses. The fear is always: Do they know something that we don't? I think the CEO answered that. His purchase (albeit nominal compared to his 443k holding) suggests to me a signal that there has been no material change in trading since the outlook statement on 11/7.

Ramridge

I bought a long position in June and sold out end July taking a <10% loss.
When a share continues to slide persistently without apparent reasons, at least to me, when the direction of travel in my judgement should be upwards, then the market is telling you something is going on in the background.

These are unknowns-unknowns that I have started to pay heed to and respect. When this happens I just quietly sell up and move on, taking the loss on the chin.

Nick Ray

I think it might be currency related as willhampson mentioned. Porvair (LON:PRV) has had a very similar trajectory to Amino Technologies (LON:AMO) .

They were both going well until the end of May since when they have fallen about 15-20% while the pound has improved against the dollar.

Hi Nick - From the end of May to a few days back, GBP / $ exchange rate went from 1.28 to 1.31 , an improvement of around 2%. The improvement is not that significant IMO

But it was as low as 1.21 in March and earlier in the year. So there could be some lag in the response.

Of course it might be some other cause. There are definitely a set of stocks which have gone into reverse in sync since end-May and for which I suspect there is a common underlying cause.

aflash

16th Aug '17

Newbieinvestor,

Go to the drop down menu on the AMO (Amino Tech) page and look at the scores on prior dates.

Some are remarkably poor e.g. 6 Nov 2016, Quality 27 and negative returns, ROC, ROE and margin.

The point is the scores and the figures shown are Historical, results for previous periods and from now until the next announcement your best indicator is the chart.

Before replying I took major advances on the chart and compared them to the drop down menu mentionned.

Starting with March 2016, before Brexit, when the price was 111p. Nothing in the info suggested the rise that followed.

Then I went to early July, just before a major move to over 140p. Again nothing spectacular in the info. Maybe some Brexit relief rally, however.

Lastly in March this year, just before another major rise, the only stand out figure is an improved Quality to 93.

Hope this helps

Amino Technologies: Stock Rank of 98 and down 20% in 4 months

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