Techinvest update on PEG9 Aug 2022 15:30
Techinvest updated on PEG a couple of issues ago and is a useful summary - note the 3.8p per share of cash together with the 1p+ EPS forecasts:
"Results for the year ended December 31 showed revenues up 4.4% to £13.57m. Gross profit margin increased to 44.9% from 36.4% a year earlier, reflecting a significant restructuring of the business in 2020. Adjusted EBITDA increased by 379% to £1.53m, while pre-tax profit reached £0.86m compared to a loss of £0.58m in fiscal 2020. Basic earnings per share were 1.51p.
Cash generation from operating activities was strong at £0.74m, contributing to cash balances at the period-end of £2.27m (3.8p per share) and minimal debt.
The order book at December 31 was circa £7.0m, with £8.0m revenue coverage for fiscal 2022. QRO Solutions had another record year in terms of revenue, cash flow and profitability. This was helped by the on-time delivery of an export order worth in excess of £0.5m to a new customer for ProVida speed enforcement systems, and increasing sales of the NASBox, whose rights were acquired in 2020, with 400 units being delivered in 2021.
Petards is expecting the coming year for QRO to continue strongly, with the addition of six new UK police forces to QRO’s customer list and the launch of several new products. Petards’ Defence made an increased contribution to group profitability.Following the board’s decision in 2020 to focus on securing smaller orders, order intake increased in 2021 and a 5-year framework contract, which was secured in June from the MOD for the support of threat simulator systems, is expected to give rise to additional order flow in the coming years.
Current macro-economic conditions are particularly tough for small companies like Petards (£6.8m market cap). In that context, this was a solid financial performance from the company and the strong order book provides encouragement for the current year. We view the product base as a significant strength of Petards’ business. The company’s software-driven video and other sensing systems for on-train applications, sold under the eyeTrain brand, have a strong customer base among global train builders, integrators and rail operators. Likewise, in the traffic segment there is good demand for the company’s Automatic Number Plate Recognition systems for lane and speed enforcement and other applications, sold under the QRO and ProVida brands to UK and overseas law enforcement agencies and commercial customers. Progress is also being made in the defence sector where Petards provides electronic countermeasure protection systems, mobile radio systems and related engineering services, sold predominantly to the MOD.
The consensus market forecast for the current year is for earnings per share of 1.03p, rising to 1.1p for fiscal 2023. A prospective P/E of 10.9 for eighteen months out looks undemanding. Continue to hold."
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