2016 diluted EPS set to jump 20.7% to 3.6p
​Vislink is a market leading, video capture and playout provider to the broadcast industry. Its cutting edge technology enables the collection of high quality live video, wirelessly, from the "scene to the screen". Its 3 core markets are broadcast hardware (68% of 2015 sales; news, sport and entertainment), surveillance equipment (13%; law enforcement, armed forces and public safety), and studio broadcast software (19%, or Pebble Beach Systems).
Given the recent bounce in equities since mid-February, it is somewhat surprising to still find the shares languishing at 27.5p, equivalent to adjusted 2016 EV/EBITA and PER multiples of 6.3x and 7.6x, along with paying a 5.5% dividend yield.
Today's results did show that 2015 revenues and adjusted EPS fell to £57.8m (-6.7%) and 3.0p (-26%) respectively, but this was partly down to the one-off nature of a large UK public safety contract where profits were recognised mostly in 2014.
Looking ahead, we believe that the Board is investing in the right areas, which should help lift adjusted diluted EPS by 20.7% to 3.6p this year and to 4.5p by 2018 - underpinned by continued strong results from Pebble Beach Systems (54% of 2015 EBITA), steady growth at Vislink Communication Systems ('VCS') and a healthy closing order book of £11.0m (vs £8.8m LY) after reporting a 2015 Book:Bill of 1.04x.
In spite of the ongoing difficulties in VCS, the broader fundamentals for the group as a whole remain supportive for double digit earnings expansion for this year and beyond. The client base includes many blue-chip names such as Al Jazeera and the Metropolitan Police - to which heavyweights like GoPro, Harmonic and BT Sport have been added over the past 2 years.
Vislink shares at 27.5p appear far too lowly rated, particularly compared to the sector and our unchanged price target of 54p/share.
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