Indigovision released their full year results today which show maintained revenues for the full year, but significantly lower profits. Given the earlier trading update in August, the results didn’t come as any surprise.
After the first profit warning, as previously mentioned, I sold the remainder of my holding in Indigovision to crystallize a 750% profit overall.
I commented at the time, both here and on the ADVFN bulletin board that I could see the SP falling below £2 in the short term, and that is exactly what has happened.
Whilst investors shouldn’t be surprised by the final figures, the outlook statement doesn’t instill any confidence in near term trading.
Whilst sales in the first seven weeks of their new financial year are comparable with last year, the order book is lower and concerns are expressed about economic conditions.
The shares took another hit today and dropped a further 14% to end at 182.5p by the close, putting them on a P/E ratio of 22.
On a P/E basis the shares look expensive, however Indigovision boasts a strong balance sheet, a 4% dividend yield, the company is cashflow positive, and has no debt.
On balance, I’m not tempted back in just yet though. Although I wouldn’t be entirely surprised by an opportunistic bid, the short term outlook isn’t encouraging, and with falling sales, higher overheads and continued margin pressure, it appears possible that they will record a loss in the first six months, and I can’t justify buying the shares purely on the possibility of a bid approach.
With a long term horizon, Indigovision may prove to be a bargain at below £2 and I will certainly keep monitoring the situation, but as I mentioned in a previous blog, it appears that Indigovision need to peddle faster just to keep still, and unfortunately this is proving difficult.
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