Alaris considers international listing
Pandemic delays antenna specialist’s projects and disrupts shipments
Antenna specialist Alaris Holdings says it is considering an international listing in the next three to five years to attract more international investors.
At its full company’s year to June financial results presentation, CEO Juergen Dresel said of an international listing: “We’d like to do that and we’re considering it but the company is still too small.”
He said that with the company's size and projections in mind it would probably be “another three to five years before that can happen”.
Alaris’s main business is the design and manufacturing of specialised broadband antennas, as well as other related radio-frequency products used in military and public-safety industries. Its clients are mostly in the Americas, Europe and Asia.
The group makes a large portion of its revenue from its international operations. In the year to June, Alaris’s US unit, mWave, and its Finland-based COJOT business, accounted for R139m of about R243m of group revenue. An international listing may help the company attract more capital from some of the territories where it is already doing business.
On Tuesday, the group said COJOT, which it acquired in 2016, recorded a 32% decrease in profit after tax to R16m, as a result of customers delaying decisions during the pandemic.
Alaris Antennas in SA experienced supply chain disruptions, including delays in export permits due the closure of government institutions during lockdown and limited flights to ship orders to customers globally. Profit after tax fell 22% to R23.1m.
But the group had cash of R110.3m at the end of June, from R41.8m previously. It said late invoicing in the prior comparative period benefited it in the early part of 2020.
The group is considering acquisitions and merger opportunities as it seeks to deepen and broaden its expertise in the microwave and radio-frequency electronics space.
Alpha Asset Management's Keith McLachlan said Alaris showed resilience “particularly given the disruptions to their supply chain and the challenges across the different geographies they service”.
“The group is aiming at driving both organic sales in (and between) existing businesses that, so far, appears to be working. Perhaps riskier (or more inspired), management aims to also deploying capital in acquisitions, particularly in the radio frequency space as they aim to play the long-game in their technology transition towards an integrated system offering within a single antenna,” he said of longer-term plans.
Irnest Kaplan, MD of Kaplan Equity Analysts, said the company had a lot of opportunities ahead, with good intellectual property and products. “They just need to capitalise further on it. I like how they are thinking long term with regard to their technology direction and road map.”
Analysts say that it will take some time for Alaris to go back to pre-Covid levels, but that its strong cash balance positions the group well for the current financial year.
In morning trade on Tuesday, the group’s share was unchanged at R2.38, giving it a market capitalisation of R299m, up 2.15% so far in 2020.
The share price of the AltX-listed company, which was 5.04% higher in the afternoon, had fallen 7.56% at close of trade, giving it a R276.05m market value.
With Karl Gernetzky
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