Shares in Calnex Solutions (LON: CLX) have slipped to a near-three year low following a profit warning for the six months to September 2023. There will be a minimal profit this year. The share price fell 30.2% to 66p. Calnex Solutions joined AIM on 5 October 2020 via a placing at 48p/share and went to an immediate premium.
The AIM-quoted telecoms and network testing instrumentation supplier is uncertain about the timing of telecoms customer orders. Revenues will be up to 30% lower than previous expectations. Normally there are additional orders at the end of a quarter, but that did not happen in September.
Fixed costs are likely to be maintained for the long-term and gross margin is expected to continue to be more than 74%. Inventories remain higher than in the past. Management is trying to diversify the client base into defence and government.
Cavendish has slashed its 2023-24 pre-tax profit forecast from £4m to £100,000, down from £7.2m last year, on revenues reducing from £27.4m to £17m. There does appear to be demand for the company’s instruments, but predicting when it will turn into revenues is difficult.
The balance sheet remains strong even though net cash is set to fall to £13.9m. The market capitalisation is £57.8m.
There is no forecast for 2024-25, but management is confident that there will be a recovery. New and improved products will help the revenues to grow again.
