Israel-based MTI Wireless Edge (LON: MWE) shares have been hit by the conflict in Israel and Gaza, but they rebounded on the back of reassuring full year figures. The share price is 15% ahead at 42p, which is the highest it has been since last October.
A sharp decline in the Israeli shekel against the US dollar meant that the AIM-quoted company revenues were slightly lower at $45.6m, although they were 2% ahead on a constant currency basis. Pre-tax profit increased from $4.59m to $4.65m. There was a reduction in potential contingent consideration for the remaining shares in PSK, partly offset by a goodwill write down.
PSK had trouble with two projects and lost money in the period. There has been higher demand for its services from the Israel government and the outlook is more positive. This meant that the distribution and professional services division generated a lower profit, but the other operations performed steadily.
The antennas division continued to improve its profit contribution even though demand for 5G antennas is relatively disappointing. There is underlying demand, but the timing is uncertain. Increased sales of military antennas internationally helped to improve the margins.
The Mottech water management division made a slightly higher profit on lower revenues. As well as irrigation services, Mottech has started to provide water fountain monitoring services. Conserving water remains important and the long-term outlook is positive for Mottech.
The balance sheet remains strong with cash maintained at $8.1m. The final dividend has been raised by 3% to 3.1 cents/share and the share buyback programme increased from £200,000 to £700,000 – lasting until March 2025. They should help to underpin the share price.
All three divisions are expected to make higher operating profit contributions in 2024, but a net interest charge is also expected. Pre-tax profit is forecast to be $4.9m. That equates to a prospective multiple of 12, while the forecast yield is around 6%. There will continue to be uncertainty, but the multiple is not demanding considering the prospects for antennas and other parts of the business.
