The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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Great post Rivaldo, thanks for sharing this. Have to say, even before this piece, there's much I like about this company. Good BoD, communicative, forward looking and solid growth. Can't remember exactly how I came across them last year, I think I was researching water management, anyway, very glad I did.
Part two - note the 100p target price giving over 40% upside:
"The group’s antenna business only made a small operating profit last year, but it’s starting to pick up larger contracts for 5G backhaul antennas as mobile network operators roll-out higher bandwith 5G services. The business is likely to gather momentum, too. Chief executive Moni Borovitz notes that “the Covid-19 pandemic has emphasised to the world the importance of mobile connectivity and this has accelerated the global roll-out of 5G services. Take-up of our 5G backhaul solution is moving ahead positively.”
Another key take for me is the group’s bumper cash performance. Even though MTI paid out a US$2.2m dividend in March, net cash increased by 10 per cent to US$9.5m year on year, a sum worth 7.5p a share. This adds weight to analyst expectations of a further double-digit increase in the dividend to 2.8¢ (2p) in 2021, implying the shares offer an attractive prospective dividend yield of 3 per cent and one that is also well underpinned by excellent prospects of strong earnings growth in the coming years.
Analyst David Johnson at house broker Allenby Capital is maintaining his full-year pre-tax profit and EPS estimates of US$4.9m and 3.14p, up from US$4.05m and 2.7p in 2020, implying MTI’s shares are rated on a cash-adjusted price/earnings (PE) ratio of 18 after factoring in forecast year-end closing net cash of US$10.2m (8.3p a share).
Based on annual revenue increasing by 6 per cent in both 2021 and 2022 to US$43.4m and US$46m, respectively, Allenby expects MTI to increase pre-tax profit and EPS to US$5.45m and 3.5p in 2022, implying the shares are priced on a cash-adjusted forward PE ratio of 15.7 for the 2022 financial year after accounting for a year-end projected cash pile of US$12.1m (9.7p a share). That’s not a punchy rating for a company forecast to increase EPS by 30 per cent over the 2021 and 2022 financial years, and one that also offers a progressive dividend policy.
It’s my view that the profit taking since my last article represents a repeat buying opportunity and I maintain my 100p upgraded target price. BUY."
The tip is subscriber-only, so here it is FYI - part one:
"Tap into a cash generative technology growth stock.
A little known cash-rich technology group has just reported 25 per cent organic profit growth driven by strong ongoing structural growth in its three main end markets.
June 15, 2021.
By Simon Thompson.
• First-quarter pre-tax profits increase 25 per cent.
• Net cash up 10 per cent year on year underpins forecasts of double-digit dividend hike.
• All three divisions performing well.
Shares in Israeli-based technology group MTI Wireless Edge (MWE:65p) have succumbed to profit taking since I covered the annual results (‘Small-caps with upgrade potential’, 1 March 2021), having doubled in value in the previous six months after I initiated coverage, at 40p (Alpha Report: ‘Tapping into 5G and climate change technologies’, 4 Sep 2020).
First-quarter results and news of further contract wins indicate that the share price reversal is seriously overdone. Indeed, MTI increased pre-tax profit by 25 per cent to US$0.9m on 4 per cent higher revenue of US$10m in the three months to 31 March 2021. The growth was organic as one would expect given that all three of MTI’s divisions have robust trading prospects driven by ongoing structural growth in their respective end markets: global warming and climate change; increased defence budget spending; and demand for next generation 5G networks.
MTI’s wireless water control and management systems division addresses water scarcity by using Motorola's IRRInet state-of-the-art communication technologies. The business continues to win new contracts, the latest being a Can$300,000 award from a major Canadian City. That contract endorses MTI’s decision to open a new office in Alberta, with a view to increasing recurring revenue from service and maintenance contracts and to be closer to end customers. MTI also extended a contract worth US$2.5m with a leading Israeli municipality for another two to four years. Global warming is accentuating the need to source more efficient irrigation systems that reduce water and power usage, a factor that is underpinning the strong demand for MTI’s technology.
MTI’s Summit electronics division, which represents 40 international suppliers of radio frequency/microwave components and sells these products to customers in Israel and Russia (fifth of divisional revenue), has reported another strong quarter, buoyed by ongoing demand from its core customer base in the defence and technology sector in Israel and Russia. Importantly, demand for future design solutions remains high, a leading indicator of future trading prospects."
Excellent news, cheers Surprised. ##
Onwards and upwards to Simon's 100p target....