Customer engagement and intelligent automation systems supplier Netcall (LON:NET) is involved in a global process automation market that is estimated to be growing at 20% a year. The company’s cloud-based annual contract revenues grew by 58% to £17.1m in the first half.
In the six months to December 2022, group revenues grew by 19% to £17.5m, while better margins meant that underlying pre-tax profit jumped from £1.91m to £3.19m. Net cash has reached £20.4m – one-eighth of market capitalisation.
Cloud-based products account for more than four-fifths of new product sales. The main health and government markets are growing.
There could be opportunities to accelerate growth through acquisitions that broaden the technology or take the company into new geographic markets. There is plenty of cash to finance any deals if they can be done at the right price.
Singer has been appointed as joint broker. Canaccord Genuity forecasts an increase in pre-tax profit from £3.9m to £5.7m. At 102.5p, the shares are trading on 35 times prospective earnings, falling to 29 next year. The forecast dividend of 0.7p a share would be more than four times covered by earnings.
