Filtronic certainly appears to be going for the big time!! Fingers crossed |
New director appointedhttps://filtronic.com/news-events/news/filtronic-appoints-new-business-development-director/ |
 Moneyweek article by Rupert Hargreaves
Filtronic’s explosive growth is only just getting started
The continual drip, drip of
companies being taken
over or delisted from the
London Stock Exchange, and
the lack of a pipeline to replace
them, is making it increasingly
challenging to find exciting,
undervalued opportunities
there. That means it’s even
more critical for investors to
act quickly and with conviction
when opportunities arise.
Filtronic (Aim: FTC)
is one such opportunity.
It is a UK-based designer
and manufacturer of highperformance radio-frequency
microwave and millimetre-wave
components and subsystems for
the aerospace industry. Over
the past decade, it has carved
out a world-leading niche in this
corner of the market, and today
it’s reaping the benefits.
A change in fortune
Historically, Filtronic’s three
main areas of activity have been
mobile telecommunications
infrastructure, defence and
aerospace, and public safety.
Orders from these sectors
provided a steady stream of
revenue, but the firm struggled
to grow and to differentiate
itself in a highly competitive
industry. Revenue stagnated, as
did the shares. After Filtronic
moved from the main market
to Aim in 2015, the stock rarely
traded above 10p per share.
The outlook started to
change in 2021 when European
countries began raising
defence spending in response
to Russian aggression. The
firm also started to attract
interest from the space sector,
as companies such as Elon
Musk’s SpaceX began to
deploy satellite constellations
in increasing numbers. SpaceX
and other sector trailblazers
have turned to low-Earth orbit
(LEO) satellite constellations
to achieve global coverage at a
fraction of the cost of traditional
geostationary orbital satellites
(GEO). LEO constellations
comprise thousands of smaller
satellites, which can be launched
in large groups, mass-produced,
and use each other to improve
range. SpaceX began launching
its Starlink LEO constellation
in 2019, and so far it’s put more
than 7,000 into orbit. As many
as 55,000 LEO satellites could
be launched in the coming years.
Filtronic announced its first
series of contracts to supply
LEO satellite communications
equipment in 2023. One
agreement was with the
European Space Agency, worth
a total of £3.2m, to develop
multi-frequency transceiver
technology for satellite payload
feeder links. The series of
smaller contracts helped the
company gain an edge in the
market while reinvesting cash
in research and development.
These investments culminated
in a transformational long-term
partnership agreement with
SpaceX in April 2024.
Linking arms with Musk
SpaceX has tied Filtronic
into a deal to get its hands on
the company’s E-band solid
state power amplifiers. These
devices help ground stations
communicate with SpaceX’s
Starlink constellations and,
as a result, are crucial to
the operation.
Under the terms of the
agreement, Filtronic issued
warrants to SpaceX, allowing
the latter to subscribe for up
to 10% of the business with a
five-year vesting period. The
warrants vested in two equal
tranches based on the volume
of orders – the first after $37m
in orders and the second on the
balance up to a total of $60m.
SpaceX also laid out plans for
the next generation of these
devices. The second tranche of
warrants is tied to the further
development of the technology.
In Filtronic’s 2024 financial
year, revenue rose 56.3%, and
earnings before interest, tax,
depreciation and amortisation
(Ebitda) jumped 280%. In the
first half of the company’s 2025
financial year, revenue rose by
202%, primarily driven by the
SpaceX contract. Following two
years of expansion, analysts
at Cavendish had expected
revenue to fall in fiscal 2026 as
the first phase of the contract
with SpaceX ended. Cavendish
pencilled in revenue of £48.4m
in fiscal 2025, falling to £41m
in fiscal 2026. It expected
growth to re-accelerate in fiscal
2027 as the second phase of
the SpaceX contract started to
pay off. But on 10 February,
Filtronic surprised the market
by announcing it had won a new
contract with SpaceX valued at
$20.9m (£16.8m) to be fulfilled
in 2025 and 2026.
A new deal
This deal was yet another
sign of how transformational
the SpaceX agreements have
been and how management
has deployed the cash to drive
further growth. Filtronic has
invested heavily to meet the
demands of its substantial
contracts with SpaceX, and
it continues to do so. The
company’s capital spending
totalled £2.1m in the first half
of the year and is expected to
come in at around £2.4m in the
second half of the year. Even
after this growth, Cavendish
had Filtronic ending the year
with £10.4m in net cash, up
100% year on year. Thanks to
the bespoke proprietary nature
of its technology, its Ebitda
margin was 19.2% in 2024 and
expected to hit 28.3% in 2025.
Filtronic’s exposure to one
primary customer is risky, but
it is winning clients, leveraging
its experience working with
SpaceX to access other parts
of the LEO market. Profit
generated from the deal is also
funding significant research and
development to drive growth
in other markets. Based on the
company’s latest deal, the stock
is trading at a forward price/
earnings (p/e) ratio of around
20 on a fully diluted basis after
stripping out cash. Even though
the stock has risen in value ten
times since 2021, its current
value isn’t too demanding,
considering its market
proposition and product base.
The company is also a prime
acquisition target. Compared
to other SpaceX suppliers in
the network communications
arena, such as Taiwanbased Wistron NeWeb Corp,
Filtronic is a minnow and
could become an incredibly
attractive bolt-on acquisition. |
I’ve finally managed to read the Money Week article and it’s excellent. Very well written and sums up very well what most of us should already know. It’s all extremely positive too. Cannot post anything as I read the hard copy mag.
The article finishes by mentioning that Filtronic is a ‘minnow’ and could be an incredibly attractive bolt-on acquisition.
Thanks again to andershow for the top-tip!!
Thanks too to hawaly - I’m working on it!!
Cheers |
That is literally the post of the year! |
That’s brilliant advice, thank you
Regards
Baz |
Hi bazworth
Anyone can read Moneyweek and countless other magazine, such as Autocar, The Week, Top Gear,for free.
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Look here:
GLA |
ANDERSHOW08, thanks
I'm too tight to subscribe!!
Cheers |
Good write up to spread the word further
hxxps://gb.readly.com/magazines/moneyweek/2025-02-21/67b71958e98ef7adf5e11ce7?srsltid=AfmBOoq-XwvpIlaxlR3fyrKHiPYU_E76KZzTIYkDtPS55Ankqi07xKP- |
https://www.linkedin.com/posts/filtronic_filtronic-case-study-subtitles-activity-7298282058286596096-4sMJ? |
Added here, MM's have walked this down to the share price before the recent spacex contract. |
Umik you’re a lifesaver - thanks for sharing. No more rocking the cot for hours, just put this on and baby KO’d in seconds. |
Wish this would go to the moon… |
New NETpark Filtronic interview https://www.northeasttechnologypark.com/post/filtronic-s-growth-at-netpark |
FTC shows how older companies can reinvent themselves by shrewd investment into R&D.
FTC floated on the London Stock Exchange in the 1990s; and after eight-bagging from 1997 to 2000, it subsequently declined by over 99%, before its current success.
And another older company that has been doing very well recently is Newmark Security (NWT), a British technology company that has expanded very successfully into America.
From the bar graph on page 12 of NWT's annual report & accounts for the year ended 30.4.22:-
"Five years of consecutive revenue growth:
HCM in North America: £m"
2017: £0.9M.
2018: £1.2M.
2019: £4.0M.
2020: £5.9M.
2021: £6.5M.
2022: £8.7M.
Like FTC, NWT floated on the London Stock Exchange in the 1990s.
And like FTC, NWT has been boosted by its exposure to security, data, and communications.
And the sort of revenue and profit achieved by FTC recently looks achievable by NWT in the medium term.
Newmark Security (NWT) 69.5p Market cap. £6.52M. |
Nat Edington, the CEO, will possibly qualify for all of his share options if and when the share price gets to circa £1.25.
The CEO is entitled to over 4 million shares that he will be able to buy at about 17p.
What a brilliant incentive - let’s hope he achieves it by a very wide mark!! |
IC - 13/2/25:
Renishaw, Filtronic & British American Tobacco: The Companies and Markets Show
9:24 Filtronic |
https://www.edisongroup.com/research/expansion-into-space-drives-profitability/BM-1127/ |
CNC announce today they are getting a US OTC listing. As Nat is on the CNC board, if it adds value I'd expect FTC to follow suit |
https://www.linkedin.com/posts/filtronic_madeinthenortheast-innovation-manufacturing-activity-7295437845089902594-1Yr-? |
Filtronic are focused on the need to broaden their customer base. This is an excerpt from the chairman's statement dated 30/7/2024...
"I am pleased to report that the year ended 31 May 2024 has been one of significant progress. We have successfully capitalised on the momentum built in prior years in bringing to market our core technology projects and enhanced market focus. This culminated in the business securing a strategic partnership with SpaceX in addition to numerous contract wins with key target clients including BAE, QinetiQ and the European Space Agency , and our opportunity pipeline continues to grow across our core markets.
These achievements have given us an excellent platform to deliver long-term sustainable growth and is a major step forward in the execution, and de-risking, of our wider strategy. To that end, we will not lose sight of the need to focus developing business opportunities in our core and adjacent markets. Expanding and diversifying our customer base remains key to growth and resilience planning." |
Sorry, was responding to post before yours. |
Alphabig, for the sake of clarity, I did mean in addition to all existing clients.
Cheers |
Why wouldn't they deliver the spacex contract(s). After all spacex must be happy as they keep coming back for more. |
Hopefully the extended leadership team will increase the number of clients / customers: |
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