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.
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.
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.”