Increased profit contributions from antenna and water distribution businesses helped to offset lower profit from the distribution operations at MTI Wireless Edge (LON: MWE). Demand for antennas in India has been lumpy, but the long-term outlook is positive.
The move from loss to profit in the antennas division was down to increased demand from the defence sector. 5G demand was weaker in the first quarter, mainly due to the lumpiness of demand from India, which is the bid regional growth market. There will be further orders this year and the Indian factory has capacity to cope with the demand.
The Mottech irrigation business is starting to see the benefits of the price rises put in place. Two long-term contracts were won in Israel worth $2.2m.
Distribution profit was much lower in the first quarter, but the outlook is positive. Defence demand remains strong.
In the three months to March 2023, revenues edged up by 1% to $11.3m, while pre-tax profit grew from $974,000 to $1.12m, helped by additional interest on the cash pile. Net cash was $8.5m at the end of March 2023, although the final dividend of $2.5m is paid in the current quarter.
Allenby forecasts 2023 pre-tax profit of $4.79m, up from $4.32m last year. Net cash should improve to $9.4m by the year end. The share price rose 1.5p to 50.5p, which is 17% lower than one year ago. The shares are trading on 15 times prospective earnings, which does not reflect the longer-term potential.
