Mustek optimistic on fibre internet expansion in SA
Technology group says that faster internet boosts demand for devices that can take advantage of it
The share price of listed technology group Mustek remained unchanged on Friday even as the company reported earnings growth for the first half of financial 2020.
Mustek, an assembler and distributor of information and communications technology (ICT) products, said on Friday that it was optimistic about its prospects as SA consumers sought devices that could take advantage of faster internet speeds.
The group reported a 9.1% rise in headline earnings per share to 75.79c for its half-year to end-December. Group revenue rose 11.3% to R3.01bn.
This was primarily due to strong growth in its Mecer brand and new products and services added to its portfolio over the past six years.
That said, profit after tax for the company was R53.6m, down 6.1% for the six months to December 2018. Revenue edged up 2% to R2.7bn. The numbers were boosted by disposal of vacant land in Midrand for R17.5m. The sale yielded an after-tax, nonheadline profit of R6.3m.
Though unchanged at R8.19 on Friday, Mustek's share price has fallen 12.31% since the beginning of 2020. This gives it a market capitalisation of R573m, almost R40m more than its sector comrade, EOH, the share price of which fell more than 75% in the same period.
Mustek said its investments in new product lines such as networking equipment, sustainable energy and fibre were beginning to contribute meaningfully to revenue and profit.
“The contributions from products such as Huawei are expected to continue growing, and though the gross profit margin might be lower for these products net profit should increase,” the company said.
Mustek also supplies fibre-cabling products to Vumatel and Vodacom.
“The group will continue to look for opportunities to add additional products to its product offering in order to better utilise its infrastructure,” it said.
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