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Amino Technologies – full-year results emphasise “expects… sustainable profitable growth”, so why a share price decline?

By Steve Moore | Wednesday 7 February 2018

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

IP-based pay-TV services technologies company Amino (AMO) has announced results for its year ended 30th November 2017 and that “Amino has made a promising start to 2018… the board expects the company to deliver sustainable profitable growth in the coming year”. The shares have responded, er, more than 4% lower further below 200p. Hmmm…

On revenue of £75.3 million, the results showed an adjusted pre-tax profit of £11.2 million generating earnings per share of 15.3p – the latter up from a prior year 13.6p. After particularly £4.4 million of dividends paid, cash (net) was increased by £6.8 million to £13 million.

The dividend per share is increased by 10% to 6.655p and the board “intends to continue the company's dividend policy of no less than 10% growth per annum for the year ending 30 November 2018”. Additionally, the company “see good opportunities for growth in the medium term as market disruption requires incumbent operators to innovate and as cable operators migrate to IP based services”.

However, I note revenue was down 7% on a constant currency basis, a tax credit benefitted earnings per share and the announcement also including “return to our normal seasonality in terms of a stronger second half financial performance”. Hmmm.

Indeed, joint broker to the company, finnCap is currently forecasting a slight earnings per share decline for the current year as more normal tax outweighs increased pre-tax profit. This suggests a current price/earnings multiple of circa 13x and dividend yield of 3.8%.

With also the balance sheet support, that looks fair enough - but I’ll await more detailed news on current trading before considering from the watchlist.

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