Mustek well positioned to grow in the ‘new normal’
The company declares a lower dividend of 26c per share, which will be paid out of income reserves
Mustek says it is well positioned to take advantage of increased demand for its technology products due to the Covid-19 lockdowns.
Mustek, an assembler and distributor of information and communications technology (ICT) products, said it is “ideally placed in an industry likely to benefit highly from the ‘new normal’ that includes working from home and remote learning across basic education and higher education sectors.”
“Our investments in new product lines such as networking equipment, sustainable energy and fibre are starting to contribute meaningfully to both revenue and profit,” the company said in a statement for its full year to June financial results.
Lead by CEO David Kan, Mustek increased its revenue by 9.4% to R6.40bn from R5.85bn in 2019, while operating profit fell 7.6% to R200.96m from R217.53m previously.
At the half year, Mustek had indicated that its revenue growth was primarily due to strong growth in its Mecer brand and new products and services added to its portfolio over the past six years.
Headline earnings per share, which stood at 127.13c for the full year, were down 8.7% compared with 139.32c previously.
The company declared a dividend of 26c per share, which will be paid out of income reserves. This is down 13.3% from the 30c declared in the previous period.
The group, valued at R485m, said growth in fibre to the home is not only assisting its fibre sales, but also increasing the demand for new devices to fully benefit from the faster internet speeds.
Mustek supplies fibre-cabling products to network operators such as Vumatel and Vodacom.
It said performance was mostly positive through the period, with operations only negatively affected by Covid-19 in April due to restricted trade during level 5 of the national lockdown.
Since then, the company said it had “seen a marked increase in the demand for our products since the level 5 lockdown and believe that the device market size is increasing, which bodes well for future replacement cycles”.
The increased market size is also expected to drive up demand for new infrastructure to support these devices and “will accelerate the growth of the ICT industry over the short and medium term.”
Mustek shares, down 25.7% for the year, were 5.16% higher at the close of trade on Tuesday.
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