Specialist tech group Etion returns to profitability after portfolio shake-up

Specialist technology group Etion, which returned to profitability after a shake-up of its portfolio that included the closure of unprofitable businesses, has signed a contract with an international customer to deliver a tactical navigation system.

The contract for the CheetahNAV system, which is used in military vehicles, will be executed over three years, the company said on Wednesday.

Formerly known as Ansys, the company has said it wants to expand into the overseas markets to mitigate the potential risks in SA, which accounts for more than two-thirds of group revenue.

“The CheetahNAV tactical navigation solution will further contribute to growth over the next three years. It has also generated interest from customers in SA, the rest of Africa and Brazil, and created scope for spin-off products to meet specific customer needs,” the company said in a statement.

Etion, which is listed on the JSE’s AltX that caters to small and medium-sized companies, offers digital solutions and cybersecurity services that will be useful to banks, insurance companies, governments and businesses.

The acceleration in online adoption due to Covid-19 has brought to the fore the criticality of data security. The work-from-home environment has also increased demand for reliable and stable bandwidth, causing increased demand for fibre connectivity.

After the portfolio review, the company consists of three operating businesses: Etion Connect, Etion Create and Etion Secure, though the latter company is being sold to JSE-listed technology group Altron.

Etion Connect benefited from the Covid-19 restrictions in the year to end-March. The resurgence in demand for fibre connectivity initiated by remote working and other Covid-19 restrictions prompted network operators to increase investment in infrastructure that provides fibre to home and businesses.

As an essential telecoms services provider, Connect was exempted from the restrictions applied to other industries during lockdown levels 4 and 5 in 2020.

The Connect division secured a bulk deal to provide products and services to support an anchor carrier customer to fulfil its three-year infrastructure expansion rollout programme for an integrated fibre and mobile network. Order in-take from other established customers also increased.

Etion Create — which designs, manufactures and supports advanced technology for a range of sectors including mining, defence and aerospace — benefited from the recovery in orders from customers who were previously affected by Covid-19 restrictions during the first half of the financial year.

At group level, headline earnings per share were 9.2c in the year to end-March, compared with a headline loss per share of 0.87c in the previous period.

The share price was up 5.13% to 41c in early afternoon trade on the JSE, valuing the company at R220m.

mahlangua@businesslive.co.za