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Telit gains momentum following sale of automotive business

Snapshot

  • Enabler of Internet of Things (IoT) technology
  • Provides hardware and consulting services for IoT
Internet of things

Quick facts: Telit Communications PLC

Price: 159.6 GBX

AIM:TCM
Market: AIM
Market Cap: £2.05 m
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What Telit does

Telit Communications PLC (LON:TCM) is a technology company specialising in the Internet of Things (IoT), the connection of different devices across the web that allows them to exchange data.

It’s the same technology that lets you control the heating from your phone or turn the lights on and off using Alexa, however Telit’s focus is on using the technology to help businesses.

The company’s products, which vary from physical technology modules all the way to consulting services to help companies use IoT, cover a wide range of sectors including healthcare, retail, security, and energy, as well as the development of smart buildings and even smart cities.

 

How it’s doing

The company reported a pre-tax profit of US$58.1mln for the 6 months ended 30 June, swinging from a US$12.8mln loss in the prior year.

As indicated in a pre-close update in July, profits in the period were boosted by US$57.2mln from the sale of the automotive business, while revenues had increased by 7.6% to US$180.3mln.

The company agreed to sell the business to Chinese firm TUS International for US$105mln in February.

Telit also reported an improvement in its net cash position to US$44.7mln from net debt of US$34mln a year ago.

Looking ahead, the company said it was “well positioned” to capitalise on growth opportunities in the IoT market and that it was confident that its performance for the full year would be in line with its expectations.

 

What the boss says – CEO Paolo Dal Pino

In the group’s interim results, Dal Pino said that following the automotive sale the company could now “refocus” its portfolio towards “more innovative industrial IoT products and services, all of which has helped improve our financial performance”.

"Thanks to these efforts, we have seen significant improvement in our cash generation, driven by solid revenue growth and our cost optimisation plan is fully on track to meet our targets", he added.

 

Inflexion points

  • The company’s deviceWISE Asset Gateway software, a cloud-based IoT platform that communicates with control systems and machines across buildings, manufacturing centres and other industrial areas, has been validated for use in software supplied by computing giant Dell
  • In late-October, the company said its new industrial-grade FN980m 5G data card has sailed through a series of live 5G tests
  • In February, Telit completed the sale of its Automotive Solutions arm to Chinese firm TUS International in a US$105mln deal that allowed the company to clear its bank debts

 

What the broker says

In a note on 10 September, Telit’s house broker finnCap reiterated their 200p price target for the firm, saying that following the “good six months” the company was now “a well-capitalised global business” with a strong position at the leading edge of the IoT market.

With the shares trading at around 169p as of 29 October, Telit carries a market cap of £224.3mln.

 

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