Very nice to see a 100,000 share purchase from one of the Directirs today. A real vote of confidence. Vislink is a long term hold and I think we will see 80p plus now within 3 years. In the meantime the dividend on offer is attractive.
Nice positive update from Simon Thompson in Investors Chronicle today. 60p target price set.
RE: Yes there are risks....
These were highly significant results for Vislink but it hasn't yet been recognized by the market. Until last year much of Vislink's business has been hardware, which is lower margin, capex and working capital intensive and typically lumpy in terms of revenue. It is still somewhat the case as the UK government contract is around £5-7million in non-recurring revenues. However these results were all about Pebble beach systems - this is high margin, cash generative and much less cash intensive and likely much more predictable. PBS generated only 15% of revenue but over half of unadjusted operating profit and this from only 9 months of trading and VLK was able to grow PBS considerably - this should continue to be a very reliable generator of profitability and cash and can reduce the reliance on the lumpy hardware revenue stream with these larger contracts effectively being a bonus. Revenue could well potentially remain stagnant or even drop in 2015 if the hardware division does not secure another large deal,however cash and net profit should still grow, while the GoPro deal could offer material upside. I also believed the believe the PBS and broadcasting segment could well make Vislink an attractive acquisition target for some of the larger players. I'm not necessarily expecting rapid share price growth - the market still looks for top line growth - however I think this is a very solid longer term hold that should be able to maintain a consistent dividend.
Yes there are risks....
...but JS's post below ignores the growth in the EPS adjusted for one-offs and normalising tax, which grew to 4.6p. A PE of 10, and a 20% rise in the divvy feels to me like fair upside potential versus the clear challenges that the business faces.
Our markets continue to be challenging. ...The reported basic undiluted earnings per share for the year was 3.2 pence (2013: 3.1 pence). After adjusting for amortisation and impairment of acquired intangibles and other non-recurring items the Group's adjusted earnings per share was 4.1 pence (2013: adjusted earnings per share of 4.2 pence).
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