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Amino is competing with the big boys
Cambridge-based Amino Technologies (AMO:AIM) provides hybrid TV set-top boxes and a cloud-based streaming service to a range of telecom companies and online content producers on a multi-country basis.
It has found a niche within the market, driven by its proprietary Engage TV platform, attracting the often-overlooked tier two and three operators.
The slew of robust trading updates from Amino in 2016 illustrated two important points.
First, there is clear evidence of telecom suppliers warming to a more software-driven, broadband delivery system to meet their internet protocol TV (IPTV) needs.
IPTV is a way of receiving TV content via an internet connection rather than a satellite dish or rooftop antenna.
Although Sky (SKY) is not an Amino customer, its Sky Q viewing platform service shows how traditional cable and satellite companies are embracing broadband delivery.
Second, Amino now has the expanded product that makes it the obvious choice for mid-tier operators, and a real candidate even for the biggest providers.
Full year results to 30 November 2016 show a business in good health. Revenue grew by 80% to £75.2m, pre-tax profit virtually doubled to £10.2m while cash flow dynamics were typically strong.
‘The key message from the results is one of strong execution,’ says Progressive Equity Research. ‘The group appears to be already benefiting from the ongoing migration of the global TV market, a migration which remains in its early stages.
‘Amino is able to sell cost-effective and highly functional devices while these are in demand, but the group is also well positioned for the evolving software-only market and demand for hybrid TV devices, particularly in the cable TV market.’
Agreements with US telecom business Cincinnati Bell and Hong Kong telecom provider PCCW demonstrate where Amino has an edge.
Running its Enable TV software across legacy set-top boxes creates large savings for clients. Amino also has a competitive advantage at the intellectual property (IP) level, with Enable being integrated across Samsung’s set-top box kit.
Integration issues relating to the acquisition of Entone that sparked a profit warning in October 2015 have long been sorted out.
We said to buy at 114p following that profit warning in the belief that management would get the business back on track. They did and the shares are now priced 87% higher.
The share price still remains inexpensive, trading on 14.5 forecast earnings for the financial year ending November 2018. Investors are also being treated to nice dividends, currently yielding 3.1% based on this year’s 6.7p forecast payment.
Net cash stood at £6.2m at the end of November 2016, implying balance sheet muscle to accommodate any strategic opportunities. (SF)
Amino Technologies (AMO:AIM) 212.8p
Stop loss: 170p
Market cap: £152.8m