MTI Wireless Edge (LON: MWE) maintained its pre-tax profit in the first half of 2022, helped by a strong second quarter performance by the antennas division, which returned to profit in the period. Recent contract wins by the group mean that it already has momentum in the second half.
In the six months to June 2022, revenues improved from $21.3m to $22.7m, while pre-tax profit barely changed from $2.05m to $2.04m, due to a higher interest charge and amortisation related to the recent acquisition of communication and monitoring systems developer PSK WIND Technologies.
It should be remembered that Russia accounted for 6% of revenues and 5% of profit in 2021. That business is no longer part of the group. PSK contributed revenues of $2m and made a small profit contribution after amortisation.
Net cash has fallen to $5.2m after paying the final dividend and acquiring 51% of PSK. The disposal of the Russian assets meant that a prepayment had to be returned and that knocked $2.79m off the cash pile. There is contingent consideration of $1.43m and bank debt of $187,000.
Divisions
Antennas lost money in the first quarter but made a profit in the six months, even though military demand was slow. In the 5G backhaul market, the company is working with five of the seven main telecoms equipment manufacturers. There is also new technology that can adapt to different climate conditions. The timing of orders is uncertain, but the potential is large.
Distribution is the largest profit contributor. PSK has renewed a contract with the Israeli Ministry of Defence which will be worth $1.4m a year over seven years. This is more than previously. At the end of June, PSK won two other contracts valued at $850,000 for delivery this year.
Irrigation technology supplier Mottech Water Solutions gained €1m of orders in Italy at the end of June, also to be delivered this year. Mottech reported a flat profit in the first half because of a planting sabbatical in Israel. The second half outlook is positive.
The share price fell 5.79% to 57p. Shore Capital expects a 10% rise in 2022 pre-tax profit to $4.4m, but flat earnings per share. That means the shares are trading on 17 times prospective earnings and the forecast yield is 4.2%. MTI Wireless is expected to have net cash of more than $10m by the end of the year.
