NB edited on 24 April to update latest contract win.
I just posted a shorter version of this on the SVCR thread, but I find it a hassle to look back at those threads months later when I am looking to research a specific company, so I thought I'd start a stand alone thread for Filtronic (LON:FTC) , which I believe will be one of the major growth stocks of 2024.
For those new to the company, it has been around for a long time and has generally flattered to deceive. They worked in the low frequency transmitter area, making component that are essential but historically relatively low margin for the defence, aerospace and telecommunications industry. Like Iqe (LON:IQE) it felt like they were running to stand still, and profits were hard to come by.
The basic stock report figures are, frankly, poor. Who would invest in a company like this?
And yet. In 2021 there was a change in management, with a new CEO in February 21 and a new chair in November. The following 24 months were difficult, as supply chains meant that fulfilling orders was not straightforward.
In a recent update they have said that results are going to be in line with expectations, so nothing exciting is expected in the results to be announced next month. The FY ends on 31 May, so the next results will, if I understand correctly, be HY 24.
What has changed is the new contracts being agreed that have yet to find their way into the figures. I'm going to set out the contract wins announced over the last couple of years, since new management came in:
October 21: $0.8m for pilot phase 5G, expected to mainly be billed in 2023
June 22: follow-on contract for the above, now expected to be $0.9m, again, mainly in 2023
June 22: new filters contract, £350k, expected to be recognised in 2023
July 22: filters with existing client, £400k, expected during FY23 with follow-on potential
July 22: defence client, £500k, expected to be delivered in 23
Jan23: low earth orbit (LEO) satellite contract worth £2m expected to be recognised in 23. At the same time the trading update said supply chain shortages meant:
"Revenue in H1 FY2023 was £8.4m (FY2022: £8.0m) representing 5% growth, with
£1.0m of adjusted EBITDA. Strong demand has…
