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discoverIE back on track as organic growth picks up

Snapshot

  • Makes and supplies innovative components for electronics
  • Key markets in renewables, transportation, medical and industry
  • Acquisitions are key part of strategy
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Quick facts: discoverIE Group PLC

Price: 690 GBX

LSE:DSCV
Market: LSE
Market Cap: £5.9 m
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What discoverIE does

DiscoverIE Group PLC (LON:DSCV) designs, manufactures and supplies highly differentiated, innovative components for electronics applications.

The group – which changed its name from Acal in 2017 - provides application-specific components to original equipment manufacturers (OEMs) internationally using its in-house engineering capability.

It focuses on key markets which are driven by structural growth and increasing electronic content, namely renewable energy, transportation, medical and industrial connectivity.

It employs around 4,000 people and its principal operating units are located in Continental Europe, the UK, China, Sri Lanka, India and North America.

 

How it is doing

discoverIE told investors that trading continued to strengthen in the four months ended January 31 2020.

The electric components company, in a statement, highlighted that its trading performance for the twelve months to March 31 is expected to land at the upper end of market expectations.

Order intake is described as strong, up 10% organically over the pre-pandemic levels. It also marks a significant improvement compared to the first half of the financial year.

The order book comprised £162mln of work, up 2% compared with this time last year and, sequentially, it has increased some 14% organically since the end of the first half, the company said

 

What the boss says: NIck Jefferies, chief executive 

The recovery through the second half to date and the strong order momentum provides a solid base from which to return to group-wide organic sales growth and underpins the expected progress into the next financial year.

“With a clear strategy focused on long-term high-quality growth markets, a strong funnel of design wins and acquisition targets, the group is well-positioned to make further progress.”

 

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What the brokers say

DiscoverIE has been tipped to increase in value by some 80% in the coming years as it benefits from the rising uptake of electrification in industrial applications.

Stockbroker Shore Capital started coverage with a 'buy' recommendation and said the shares have the potential to reach 1,250p within four years if the company achieves its FY2025 targets.

“We believe that the company is well placed to benefit from the long-term trend of increased electrification in industrial applications. This has been driven by a rise in automation, which we believe may be accelerated by COVID-19, given the sharp fall in employment in the global manufacturing sector.”

German broker Berenberg upped its share price target following the bullish trading update for the four months to 31 January.

Organic order intake increased 10% year-on-year, while gross margins remained firm in spite of material headwinds elsewhere.

Recent acquisitions appear to be performing well, Berenberg said, and another strong cash performance resulted in a better-than-expected gearing position at the end of January.

The broker’s share price target rises to 770p (from 660p).

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discoverIE Group says 'orders have been strong' and target markets have...

discoverIE Group's (LON:DSCV) Nick Jefferies speaks to Proactive London about their performance for the full-year trading which is expected at upper end of expectations. Jeffries says the recovery through the second half to date and the strong order momentum provides a solid base from which...

3 weeks, 3 days ago

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