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discoverIE makes a strong start to the financial year

The maker and supplier of customised electronics ended the quarter with a record order book of £135mln

printed circuit board
The design and manufacturing division, which generates around 75% of group profits, saw “broad-based organic growth”, investors were told

discoverIE Group PLC (LON:DSCV), maker and supplier of customised electronics, said it was on course to deliver earnings in line with expectations following a strong start to the financial year.

Sales rose 12% at constant exchange rates and 3% organically, while orders increased 16% at constant currencies, or 7% organically.

The order book currently stands at a record £135mln, of which 80% is due to be shipped in the next 12 months.

Gross profit margins were also up, reflecting discoverIE’s focus on products with higher added value.

Tough year-earlier comparisons

The solid performance was achieved against some tough year-earlier comparisons.

“The positive trading momentum seen last year continued into the first quarter, with the group on track to deliver earnings in line with our expectations,” said discoverIE.

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New project design wins, a key driver of organic growth, grew strongly, while the design and manufacturing division, which generates around 75% of group profits, saw “broad-based organic growth”, investors were told.

Santon, acquired in February, has won a number of new projects in its industrial and transportation business for delivery this year.

Sales in the solar business slowed following a reduction of Chinese feed-in tariffs, though this was anticipated.

Broker upbeat

The shares, up just under £1 in the last year, were trading sideways at £4.24. Broker Peel Hunt reckons the stock is worth £5 and rates it ‘buy’.

It expects 2019 sales to be £428.1mln, up from £387.9mln, while adjusted pre-tax profit is expected to be £25.7mln, 17% ahead of the year-earlier number.

“The outlook is solid, with management confident of further progress,” said Peel Hunt analyst Henry Carver in a note to analysts.

“This is underpinned by the strength of the orderbook – not just the percentage increase, but the concentration of high quality design wins in the key target markets. Our forecasts, which are in line with consensus, remain unchanged.”



Quick facts: discoverIE Group PLC

Price: 423.5 GBX

Market: LSE
Market Cap: £341.64 m

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