Two Tech Stocks Under Focus - XP Power Ltd and EQTEC Plc

  • Nov 07, 2019 GMT
  • Team Kalkine
Two Tech Stocks Under Focus - XP Power Ltd and EQTEC Plc
XP Power Ltd

United Kingdom-based XP Power Limited (XPP) is a manufacturer and developer of critical power control mechanisms for the electronics sector. The group offers power solutions, including DC-DC converters and alternating current (AC)-direct current (DC) power supplies. The company's operations are differentiated according to three geographical segments: Europe, North America and Asia. Currently, the group is a member of the FTSE All-Share and FTSE techMARK index.

XPP-Trading update Q3 FY19

The company released a trading update for the third quarter of the fiscal year 2019 for the period ended 30th September 2019. The company’s revenue surged by 2 per cent (on actual basis) from £52.9 million in Q3 FY18 to £53.8 million in Q3 FY19. The company’s orders increased to £55.9 million, roughly by 8 per cent (AER basis). The company’s net debt was recorded at £50.0 million as on 30th September 2019, which reduced marginally from £50.4 million as on 30th June 2019. The company announced a dividend of 20 pence per share for Q3 FY19, making the total dividend for the first three-quarters of the Financial Year 2019 to 55 pence per share.

XPP-Financial highlights for H1 FY19

(Source: LSE)

In H1 FY2019, Order intake stood at £100.6 million, a decrease of 1 per cent against the £101.4 million in H1 FY18, while on a constant currency basis, it decreased by 7 per cent. Revenue surged by 6 per cent to £98.9 million as compared with the corresponding period of the last year. This increase was because of an increase in the healthcare sector of 8 per cent, the industrial sector of 13 per cent, and Technology sector of 12 per cent, but weakness in the Semiconductor Manufacturing Equipment sector. On a reported basis, Own-design XP product revenues surged by 6 per cent to £77.3 million against the £72.6 million in H1 FY18 and represented 78 per cent of total revenues. Gross margin declined to 44.6 per cent, driven by the effect of Section 301 trade tariffs imposed by the United States on goods imported from China, adverse geographic and product mix, and the effect of component price inflation incurred during 2018 when supplies of critical electronic components constricted. In the first half of 2019, Adjusted profit before income tax was £16.6 million, a decrease of 18 per cent from the previous year same period data, while reported profit before tax stood at £12.9 million. Reported Profit attributable to equity holders reduced by 29 per cent to £10.3 million as compared to £14.6 million in H1 FY18. Adjusted diluted earnings per share stood at 69.2 pence, a decrease of 17 per cent from the same period in 2018. Reported diluted earnings per share was 52.8 pence in H1 FY19. Cash generated from operations rose by 59 per cent to £25.2 million against the £15.8 million in H1 FY18, reflecting the improved working capital management. On 30th June 2019, the net debt reduced to £50.4 million as compared with the corresponding period of the last year. For the first half of 2019, dividend per share surged by 6 per cent to 35 pence against the 33 pence in H1 FY18, reflecting the confidence, the Board has in the company's longer-term prospects.

The company’s announced results for the first half of 2019 reflect tougher trading conditions. While growth in the Industrial, Technology, and Healthcare markets remained healthy, this was offset by a cyclical slowdown in the Semiconductor Equipment Manufacturing market and pressure on the gross margins, resulting from the surge in the United States trade tariffs on Chinese manufactured goods, historic component product mix and price inflation.

The company is well-positioned to take additional share and will benefit from any recovery in the Semiconductor Equipment Manufacturing sector. The company remain conscious of potential risks arising from the international macroeconomic challenges and continue to anticipate an improved revenue performance in the H2 FY19 as a result of the surge in the order book since the year-end. With a proven strategy, robust design win momentum and an extended product portfolio, the Board remains positive regarding the prospects of the group.

XPP-Share price performance

(Source: Thomson Reuters)

While writing (as on 07th November 2019, at 10:03 AM GMT), XP Power Ltd shares were trading at GBX 2,770.00 per share; which remained flat as compared to the previous day closing price level. The company’s market capitalisation was around £534.13 million.

XPP shares have clocked a high of GBX 2,820 (as on 07 November 2019) and a low of GBX 1,855 (as on 01 August 2019) in the past year. At the current price point, as quoted in the price chart, the company’s shares were trading 1.42 per cent below the 52-week high price point and 49.32 per cent above the 52-week low price point.

At the time of writing, the stock’s volume before the market close, stood at 624. Stock's average daily traded volume for 5 days was 8,480.20; 30 days- 7,143.23 and 90 days – 15,308.94. The company’s stock beta (5Y monthly) was 0.86, which makes it less volatile as against the benchmark index.

The average daily traded volume for 5 days surged by 18.72 per cent as against 30 days average daily traded volume. At the time of writing, the shares of the company were trading above the 30-days and 60-days SMA.

In the past 1 month, XPP shares have delivered a positive return of 13.99 per cent. Also, on a YTD (Year-to-Date) time interval, the stock surged by approximately 31.59 per cent and was up by 37.13 per cent in the last three months.

EQTEC PLC

UK based EQTEC Plc (EQT) with its technology, converts waste into gas to run energy projects. The company is specialising in advanced gasification technology for industrial size power plants. The group is focussed on finding innovative measures to reduce increasing global waste and convert it into synthetic gas, which can be used to power turbines and generate electricity. The company is known for its advanced modular gasification technologies offering higher efficiency as compared to the competitors. The company helps project developers in the construction of waste disposal plants with higher profitability margins.

EQT-Recent developments

EQTEC Plc released an update on the North Fork biomass project in California. The project is regarding constructing and operating of a biomass plant of 2 MW capacity by North Fork Community Power LLC (NFCP). The company also acquired an interest of 19.99 per cent in NFCP on financial close of the project earlier in June 2019. In July 2019, the State of California allowed NFCP to issue tax-free bonds amounting to US$9.3 million and non-tax-exempt bonds totalling US$5.5 million to potential investors for fundraising. Furthermore, EQTEC will invest US$2.5 million to make this project reach financial closure. Due diligence and finalisation of legal documentation are in process for issuance of bonds. The fires in the forests of California have caused catastrophic impact and therefore, the process is taking much longer than expected to complete. The company has agreed with Phoenix Biomass Energy Inc to bring the project to a financial close by offering debt instruments to the potential investors. This collaboration will also address this crucial environmental and social appeal in the state.

EQT-Share price performance

(Source: Thomson Reuters)

While writing (as on 07th November 2019, at 09:58 AM GMT), EQTEC Plc shares were trading at GBX 0.107 per share; plunged by 2.72 per cent as compared to the previous day closing price level. The company’s market capitalisation was around £3.41 million.

EQT shares have clocked a high of GBX 1.84 (as on 15 January 2019) and a low of GBX 0.092 (as on 06 November 2019) in the past year. At the current price point, as quoted in the price chart, the company’s shares were trading 94.18 per cent below the 52-week high price point and 16.30 per cent above the 52-week low price point.

At the time of writing, the stock’s volume before the market close, stood at 4,045,150. Stock's average daily traded volume for 5 days was 6,110,911.40; 30 days- 8,364,865.63 and 90 days – 12,319,637.77. The company’s stock beta (5Y monthly) was 1.89, which makes it more volatile as against the benchmark index.

The average daily traded volume for 5 days plunged by 26.95 per cent as against 30 days average daily traded volume. At the time of writing, the shares of the company were trading below the 30-days and 60-days SMA.

In the past 1 month, EQT shares have delivered a negative return of 38.89 per cent. Also, on a YTD (Year-to-Date) time interval, the stock plunged by approximately 88.17 per cent and was down by 53.19 per cent in the last three months.

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