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discoverIE Group PLC

discoverIE steams ahead as order book expands

Snapshot

  • Makes and supplies innovative components for electronics
  • Key markets in renewables, transportation, medical and industry
  • Company is on track to meet full-year expectations
  • Order book at the end of September rose to £153mln
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Quick facts: discoverIE Group PLC

Price: 538 GBX

Market: LSE
Market Cap: £477.24 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's doing

For the six months ended 30 September, the customised electronics maker delivered an underlying operating profit of £17.7mln, 22% higher than the prior year, while revenues climbed 10% to £232mln.

The growth in profits was boosted by an increase in operating margins to 7.6% from 6.8% a year ago, while the company also increased its share of non-European sales to 24% from 20% previously.

Design & Manufacturing, the company’s largest division accounting for 63% of sales, also saw 7% organic growth in the period.

As a result of the improved performance, the group’s interim dividend was raised by 6% to 2.97p per share.

Looking ahead, discoverIE said it had achieved a record order book at the end of the first half of £153mln, 15% higher year-on-year, while orders into the second half of the year had continued to be ahead of sales.

In a statement, Nick Jefferies, the group’s chief executive, said the group’s target markets were now generating two-thirds of revenue, up from less than half three years ago, and that the group was “on track to deliver full-year earnings in line with our expectations”.

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What the brokers say

Following the results in latye-November, discoverIE’s house broker Peel Hunt hiked their target price for the group to 650p from 530p and retained their ‘buy’ rating, saying the company was continuing to deliver steady growth despite what it said were “very mixed end markets”.

“These results, delivered against tough market conditions, demonstrate the extent to which the strategy has matured and the model has been proven and they place discoverIE alongside a small handful of names in the sector that have shown high levels of resilience in these markets”, said analysts.

Meanwhile, fellow broker finnCap also increased their target price on the group, albeit to a slightly lower 579p from 535p.

Analysts echoed Peel Hunt’s sentiments on the company’s growth, saying it was “very well placed to further progress its growth track record despite more short-term economic caution generally”.

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DiscoverIE reports strong first half growth in revenue profits and earnings

DiscoverIE Group PLC's (LON:DSCV) Nick Jefferies tells Proactive London's Andrew Scott they've delivered a 22% rise in first-half profits thanks to their focus on growth markets and higher margin acquisitions. For the six months ended 30 September, the customised electronics maker delivered...

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