IND Article Discussion Thread

Cracking post-close trading update from IND this morning:

"The board of IndigoVision, a leading global supplier of IP security systems, is pleased to report that in the second half year the Company experienced strong sales, particularly in the final month. As a result the board estimates that turnover for the year to 31 July 2009 was approximately GBP26.3m, some 43% higher than the previous year. Sales growth was strong in the Middle East and APAC, and particularly strong in N America.Supporting this growth were airports, casinos, banks and the US-Canada border crossings.

As expected, gross margins were marginally lower than in 2008 reflecting a change in sales mix. However, operating margins for the period are expected to improve marginally year-on-year, as a consequence of which operating profits for the year just ended are expected to be materially ahead of market expectations."

So revenue up 43% y-o-y, and H2 up 69% over the same period in 2008.  Gross margins will still be in the region of 68-69%.  With operating margins slightly above last year's 11%, then op. profit may well comfortably exceed £3m - it was £1.5m last year.

Seems the mamagement team have just hunkered down over the last year and got on with it, producing this sparkling update.  Of course, it helps to be in a growth industry and this may just be the start.

SM

Hi SM,

My analysis pretty much concurs with yours, concerning the top line. However, I have found one anomaly concerning the bottom line.

If I assume 10% cost and R&D growth relative to the first half, that would lead to a massively higher operating margin, rather than a "marginally higher" one, as stated in today's announcement. Assuming a gross profit margin of just 65% for the second half, I get a gross profit of £10.2m for that period, against £7.2m for the first half. Most of that extra £3m should drop straight through to the bottom line. With my 10% cost growth assumption, I get a net profit of £5.0m for the year!

So, either IND are understating the growth in operating margin, or costs have grown at a higher rate than I'm expecting. It will be interesting to see which of these is the case in the prelims. ;0) Should it be the latter, then it will be interesting to dig into the reasons with the company: if they've been adding heavily to their salesforce then we might expect stronger growth than the 30% I'm currently guessing at going forward. It is also possible that the extra costs result from additions to the support team, to support the growing customer base - in which case, I ought to relate my cost growth assumptions more closely to the sales growth assumption.

Either way, the shares look good value at the current price - & kudos to the IND team for such a stonking result in the current climate.

Best,

Mark

Hi Guys,

I've been accumulating these over the last week or so, and bought some more today even after the big SP rise. I read all about IND on The Motley Fool where this share seems to have a big following, and then read all the previous 5 years worth of RNS's. These would have been a lot more interesting if I had owned the shares all this time!

I really don't understand why this share is so cheap. It seems to me to be a growth share "par-excelance" with outstanding prospects, yet the FT quotes a future PE of 7.7.

Am I missing something?

Cheers to all,

Jim

Well, the Mail on Sunday tip has brought new investors into IND and the share price has increased by approx 15% since, but is there now some froth in the price, or will tomorrow morning's results and outlook statement give us cause for further optimism?