Happy Friday!

I usually talk about profitable rather than unprofitable companies, and Filtronic (LON:FTC) is currently the former rather than the latter:




Filtronic (LON:FTC)

Share price: 12.625p (+26%)
No. shares: 206.9m
Market cap: £26m

Trading Update

This company has been on the receiving end of some well-deserved scepticism on these pages in recent times, as it has a track record of losses and ended up significantly increasing its share count in fiscal 2016.

It makes radio frequency, micro-wave and millimetre-wave products for the telecoms and aerospace industries, along with other related products and services (best to take a look at its website!)

Excellent Q4 update today:

Trading during the fourth quarter of the current
financial year ("FY2017") in the Filtronic Wireless business has been
ahead of previous management expectations and despite some marginal,
short-term weakness in trading in Filtronic Broadband, the board now
expects total Group revenue of approximately £35 million in the year
ending 31 May 2017, with a commensurate increase to operating profit,
both of which are ahead of market expectations
.

Checking the company's H1 report, I see that it made operating profit of £2.4 million from revenues of £21.6 million (and warned that H2 would be lower).

It's still a high-risk micro-cap, of course, and receives a "Highly Speculative" Risk Rating from Stockopedia.

The customer base is probably still rather concentrated. Last year's annual report said that "until we have expanded our product portfolio and customer base we will remain exposed to short term variations in demand patterns at our main customer". The top four customers in aggregate were responsible for a huge 74% of turnover.

Sales have much more than doubled in fiscal 2017 compared to 2016, so diversification should have improved now at least compared to that level of concentration.

Also, it has significantly strengthened its financial position after last year's placing - my initial glance at the interim balance sheet shows it has a significant excess of current assets over all liabilities (nearly all in the form of customer receivables, so it is relying on getting paid).

Anyway, I'm flagging it here as it might be worth more considered research if you have an interest in the industry and the appetite for this level…

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