reports
- Richard Williamson
discoverIE Group - Moving in the right direction
In H125, discoverIE used its flexible operating model and ongoing efficiency initiatives to drive underlying operating profit growth despite a 5% revenue decline. Customer destocking has abated during H1 and order intake was 7% higher year-on-year and 1% higher on an organic basis. Strong design win activity positions the company for growth as customer demand returns. Management maintained its earnings outlook for FY25 and in addition to improving customer demand, lower interest rates should sta...
- Richard Williamson
discoverIE Group - Orders stabilising, EPS & margin targets on track
discoverIE’s H125 trading update confirmed that underlying earnings expectations for FY25 are unchanged. Destocking by industrial customers reduced in H125, with some now starting to place orders, resulting in a stabilisation in group order intake. Design wins in H125 with an estimated lifetime value (ELV) of £205m provide a strong foundation for future growth once destocking is complete. We maintain our FY25 and FY26 EPS forecasts despite reducing our revenue forecasts to reflect FX headwinds a...
DiscoverIE Group Plc: 4 directors
Four Directors at DiscoverIE Group Plc bought 48,211 shares at between 618p and 634p. The significance rating of the trade was 69/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the la...
- Richard Williamson
discoverIE Group - Moving into the next growth phase
discoverIE’s first capital markets day (CMD) in six years was an opportunity for the group to recap how via its buy-and-build strategy it has successfully grown the company from a market cap of £25m in 2009 to £592m today, while transforming the business from an electronics distributor to a pure-play specialist electronics design and manufacture company. Management also outlined how it expects to drive future growth and profitability. New at the CMD was the announcement of an additional target m...
- Richard Williamson
discoverIE Group - FY25 earnings expectations maintained
discoverIE’s Q125 trading update confirmed that underlying earnings expectations for FY25 are unchanged. While the Q125 revenue decline reflects the lower bookings environment in previous quarters, book-to-bill was above one and bookings increased organically year-on-year despite ongoing destocking by customers in the industrial market. Robust gross margins and a well-controlled cost base support the company’s 13.5% target operating margin for FY25 and we maintain our forecasts.
- Richard Williamson
discoverIE Group - FY24 demonstrates resilient business model
In a difficult trading environment, with customers in the largest target market in a digestion phase after widespread supply chain disruption, discoverIE reported strong underlying operating profit growth and margin expansion. Despite higher net finance costs and currency headwinds, underlying EPS increased 5% y-o-y (+10% at constant exchange rates). We forecast modest growth in FY25 and FY26 and continued margin expansion in line with company targets and expect further M&A to boost growth.
- Richard Williamson
discoverIE Group - FY24 EPS in line; good margin progress
discoverIE anticipates reporting FY24 underlying EPS in line with board expectations. After a period in mid-FY24 of working down inventory, customers appear to be reverting to normal ordering patterns, with Q424 organic revenue growth of 2% y-o-y and 11% q-o-q and a strong pipeline of design wins at year-end. We have revised our forecasts to reflect lower revenue, partly due to a disposal, but maintain our profit forecasts, which results in operating margin expansion in FY24 and FY25.
- Richard Williamson
discoverIE Group - Orders return to growth; FY24 earnings on track
discoverIE’s Q324 trading update confirmed a return to organic order growth, while the decline in organic revenue reflected the expected unwind of customer inventory. The company notes that margins remain robust and it anticipates meeting the board’s earnings expectations for FY24. We have reduced our revenue forecasts to reflect the strength of sterling versus a range of currencies but maintain our operating profit and EPS forecasts, resulting in a small uplift to operating margins in both year...
- Richard Williamson
discoverIE Group - Resilience from focus on strategic growth markets
discoverIE’s H124 results reflected improving profitability despite the expected lower demand due to customer destocking and the weaker economic environment. With normalisation of the order book effectively complete and strong growth in design win activity, the company is well positioned to grow as customer confidence returns. discoverIE is making good progress towards its margin targets and maintains its outlook for FY24. The company has an active pipeline of acquisition targets, which should f...
- Richard Williamson
discoverIE Group - Innovative electronics for the industry
discoverIE is a leading designer and manufacturer of electronic components for industrial applications. Over the last 12 years, the company has broadened its product range, customer base and geographical presence via a series of acquisitions. It designs and manufactures customised and niche products, and expansion along the supply chain has helped discoverIE to grow operating margins. The company reports across two divisions: Sensing & Connectivity (15 businesses across nine countries with 13 ma...
- Richard Williamson
discoverIE Group - Strong growth in margins & design wins in H124
discoverIE’s trading update confirmed organic revenue growth and operating margin expansion in H124. The company expects to deliver FY24 underlying earnings in line with its recently upgraded expectations; we maintain our operating profit and EPS forecasts. As expected, the order book continues to normalise but still provides good visibility for H224, and strong design win activity provides support for growth in the medium term.
- Richard Williamson
discoverIE Group - Creating an industrial wireless connectivity cluste...
discoverIE has acquired 2J Antennas Group, a Slovakian-based designer and manufacturer of antennas, for €52.5m/£45m in cash from existing facilities. As a technology platform acquisition, 2J will be combined with Antenova to create a new technology cluster for industrial wireless connectivity. The acquisition is expected to be accretive to underlying earnings in the first full year post completion; we maintain our FY24 underlying EPS forecast and raise our FY25 forecast by 0.8%.
- Richard Williamson
discoverIE Group - Adding power-over-ethernet capability
discoverIE has announced its first acquisition this fiscal year, buying Silver Telecom Limited (Silvertel), a designer and manufacturer of power-over-ethernet (PoE) solutions, for £21m in cash. UK-based but with an international customer base, the deal follows the group strategy to expand outside of Europe. On completion (expected by the end of H124), the deal should be immediately accretive to EPS and operating margins.
- Richard Williamson
discoverIE Group - Trading on track in Q124
discoverIE’s Q124 trading update confirmed that earnings for the period were in line with the board’s expectations. The reduction in supply chain challenges has helped gross margins and is also driving a normalisation of the order book. Organic growth of 3% y-o-y against tough comparators is in line with our forecasts, which we maintain. With a focus on structural growth markets, a strong order book and a pipeline of acquisition opportunities, the company is well positioned to make progress towa...
- Richard Williamson
discoverIE Group - Raising the bar
For FY23, discoverIE reported double-digit organic revenue growth, operating margin expansion to 11.5% and strong free cash generation. On track to meet its FY25 operating margin target of 13.5%, the company has set a more testing target of 15% by FY28. We have upgraded our forecasts, which reflect more modest revenue growth than in FY23 as the order book normalises and continued operating margin expansion, and we expect further M&A activity to boost growth and profitability.
- Liberum Research Team
- Liberum Research Team
- Liberum Research Team
- Liberum Research Team
- Edward Maravanyika
LIBERUM: Research Reels: discoverIE Initiation - Stepping up the margi...
Buy-rated discoverIE has evolved from a distributor of standardised electronic components to a specialist in the engineering, design, and manufacturing of customised electronic components & systems for industrial customers in niche markets. In this short video, Ed Maravanyika, Head of Industrials research gives an overview of the investment thesis, talks about the recent upgrade to the target price, and also highlights that the shares offer investors c.20% potential upside.
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