Apologies, just sat on site having a tea break.DbD :-) |
Come on Nabil , give us a boomer RNS to the upside.DbD :-) |
 Strong earnings growth profile
So, with interim results de-risking full-year earnings estimates, analyst David Johnson at joint brokerage Allenby Capital pencils in 41 per cent growth in Spectra’s pre-tax profit to $11.7mn on 124 per cent revenue of $45.5mn in 2024. On this basis, earnings per share (EPS) rise 30 per cent to 18.7¢ (14.9p), implying the shares are rated on a trailing price/earnings (PE) ratio of 14.4.
Furthermore, although Spectra had net borrowings of $0.3mn on 30 June 2024 due to the working capital build in relation to the July 2024 contract, the central bank subsequently made an initial cash down payment of $9.4mn which supports Allenby’s closing net cash estimate of $6mn. Net cash could more than double to $13.7mn by the 2025 financial year-end as Spectra is expected to more than double pre-tax profit and EPS to $25.3mn and 39.4¢ (31.3p), respectively, on revenue of $54.8mn. On this basis, the shares trade on a miserly forward PE ratio of 6.9. Prospective dividend yields of 4.5 per cent (2024) and 4.8 per cent (2026) add to the attraction.
Spectra shares have delivered a total return (TR) of 71 per cent since I suggested buying at 135p (‘Alpha Research: Don’t miss out on the authentication boom’, 22 August 2022), during which time the FTSE Aim All-Share TR index has shed 16 per cent of its value. However, the share price has dipped 13 per cent since the interim results (‘This stock's earnings upgrade cycle will keep turning’, 2 October 2024). The de-rating is wholly unwarranted and offers a repeat buying opportunity with 50 per cent upside to my target price of 325p. Please note that Spectra has two classes of shares, and the unrestricted ones (AIM:SPSY) are the most liquid. Buy. |
Banknote manufacturer could double earnings this year with a prospective dividend yield of 4.8 per cent.
Aim-traded technology company Spectra Systems (SPSY:215p) is forecast to report record annual results at the end of March and double earnings in 2025.
It’s not wishful thinking, nor is it being priced into the valuation of the £105mn market capitalisation company that makes its money from banknote authentication, brand protection technologies, security printing and gaming security software. That’s because Spectra was awarded a massive $39.6mn (£31.4mn) contract to manufacture advanced high-speed banknote sensors for a central bank in July 2024. The majority of revenue will be booked between 2025 and 2027, with a trailing manufacturing agreement worth $4.5mn per year thereafter likely to be secured in the current quarter, but the contract will still make a material contribution to last year’s result.
In addition, the acquisition of Wolverhampton-based Cartor Security Printers is working out well. Earlier this month, Castor announced a five-year contract (worth $3-4mn) to produce definitive postage stamps for a European Union postal stamp supplier. Castor’s technology incorporates 2-D barcode serialisation to significantly reduce losses from counterfeiting and the reuse of stamps. The acquisition of Cartor in December 2023 has also substantially advanced Spectra's position in polymer substrate for banknotes and strengthened its competitive position against incumbents De La Rue (DLAR), Crane NXT (US:CXT), and CCL Industries (CA:CCL). I understand that a second prospective Middle Eastern central bank has approached Spectra about its Fusion polymer banknote substrate. Potential polymer banknote substrate contract awards are not embedded into analysts forecasts, so offering scope for upgrades if they materialise, as seems likely. |
Record results expected to be announced in late March
Earnings set to double in 2025
2025 forward PE ratio of 6.9 and dividend yield of 4.8 per cent
Net cash forecast to double in 2025
$3-4mn recent contract win |
Yes - well spotted.
This company’s strong earnings are woefully underrated
Simon Thompson: Banknote manufacturer could double earnings this year with a prospective dividend yield of 4.8 per cent |
I think this might have been tipped by ST yesterday? It does seem crazy cheap down here. |
Sector ; Computer programming service ?
What do these people actually do ? |
I think it is very significant. Cartor's key market is barcoded stamps and this shows us that the growth story outside the Royal Mail business into other countries is real. I agree won't move the dial in any financial forecasts but very good news |
It's decent of them to make the effort but it's not really a significant announcement so I wonder whether it will get the share price out of the current stop-loss doom loop... I certainly hope so. |
Like I said.DbD :-) |
Falling off the edge of a cliff. Chart wise I wouldnt be surprised if we see 170p.
Im not sure Nabil is the CEO we really need.
News flow has been declining year by year....and any tranfoemational news hasnt really landed depsite SPSY inferring it would for over 8 years now. |
Clearly the lack of positive news since the interims is (unfortunately) doing the company no favours in these uncertain times. |
Definitely out of favour at the moment. Lowest price for over a year. Didn't think I would see this price again. Wish I hadn't bought more in the middle of 2024 !! |
Meanwhile in the UK, the number of people seeking help with debt issues in January this year is at an all time high.
Part of the advice from specialists including Citizens advice centres....... is to use cash and stop usisng bank and credit cards.
This is in contrast to our area, where we have a number of cash only outlets stagnant but growing number of busines's refusing to take cash, and on-line and/or card only. |
Thanks for the link and he did seem pretty positive to me too. I'm not too sure how accurate his statment of "use of banknotes globally is on the wane" actually is. The info I gleaned from a gloogle search would lead me to belive the opposite hxxps://www.cranecurrency.com/news-insights/the-role-of-cash-is-changing/ I found this among others.
3800 |
This may point you in the right direction:https://substack.com/home/post/p-154372813 |
Hi PJ1 could you post a link to what boon-koh wrote please, it's always good to read a well reasoned contra view. It is really easy to get sucked in with confirmation bias.
3800 |
It has also been ''tipped'' in various publications and we all know how quickly hot money gets bored in the hunt for the next hot stock
Although for some balance, a seemingly intelligent investor called boon-koh did a justification for it being over-valued with his reasons for not buying |
I have this on my watchlist and appreciate the great comments in here. The lack of news flow creates uncertainty and risk. It's a very interesting company in a niche market but let's get an update so that market can understand whats next. |
News flow has been appalling and the number of RNS giving anything new are near non-existant, compounded by the fact Nabil said ''more news to come'' and it hasn't, months ago.
Either that or a profit warning is on the way. All IMO |
FWIW
I would say there has definitely been a seller of SPSY selling into any strength for a few weeks.The price action would confirm this, today's drop then slight rebound on big volume might just have seen the seller cleared.
Lets hope so. |
Considering the way Nabil operates I'd like to think it's not down to something we don't know. I'd more likely suggest that America is pretty sensitive right now, and since spectra is US based the baby is most likely being thrown out with the bathwater? |
This is brutal. Either a great buying opportunity or something we don't know. Seems more than general AIM weakness. 200 dma average smashed through and stop losses hit. Definitely now in bear territory as a stock. Painful to my portfolio as all my recent "bargain" purchases are quickly underwater |
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