Transense Technologies LON:TRT the Bicester-based, AIM-listed manufacturer of advanced wireless and passive vibration sensory equipment used in the aerospace, mining, motor and industrial sectors, published its half-year interim results for the period ending 31st December 2023 and demonstrated a period of robust growth.
The technology company reported revenues of GBP1.81m, up 10% from 1H23 and the company managed to reduce its operational expenses to GBP970,000, down 18% from the previous period.
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Earnings increased by 105% to GBP740,000 and profit was up 146% to GBP630,000. This was accompanied by an increase in earnings per share, which was up to 4.32p, an increase of 73%. The company had GBP1.3m cash in the bank at the end of the year.
As previously reported, Transense Technologies has two divisions that develop and supply sensor technology and measurement solutions: SAWsense, a proven Surface Acoustic Wave (SAW) sensor technology used in demanding applications to accurately and reliably measure torque, temperature, force, and pressure to improve performance, efficiency, and safety, and Translogik, which is a tyre inspection and data capture tool, used by the world’s leading fleet managers, tyre suppliers, and service centres to rapidly and accurately capture and digitalise safety-critical tyre condition data, that can then be used to reduce operating costs and improve safety.
Results justify increased investment
The Oxfordshire company said that the last half-year’s results: “more than justify the planned increase in investment in business development and engineering recruitment in the second half of the year,” as Transense gained momentum and started to gain a foothold in new market sectors.
The company highlighted the progress it was making in its Translogik division, having engaged with two new tyre manufacturers, five new tyre and maintenance management software providers, two major UK tyre service centre groups and a number of large UK fleet operators, pushing out its pipeline of opportunities through to 2025.
SAW also had a year of progress, as Transense was involved in eight active development projects – four in aerospace, two in automotive e-drives, and one in robotics – and was gaining traction in aerospace, measuring torque, force and temperature in engines, control surfaces, landing gear and gearboxes with a broader base of customers. Its contract with General Electric NYSE:GE offered a stable base to win other contracts with other providers in the industry.
Nigel Rogers, Transense’s chairman said: “Revenue visibility is now much clearer for Bridgestone iTrack, and the increasing pipeline activity at Translogik is expected to provide a clear growth trajectory. Visibility of SAWsense revenue is also beginning to improve as the customer base expands and programmes mature, and the concentration risk is reducing.”
Transense Technologies expects short-term reduction of profit
Rogers confirmed that the company would invest on the back of its 2023 momentum, which might lead to a short-term reduction of profit due to the level of investment the company was gearing up to make, but promised that investment now would lead to improved medium-to-long-term growth.
Ian Jermin, an analyst for Allenby Capital, which has Transense under coverage, was a bit nervous about Rogers’ comments on a reduction in profits but was generally still positive on the stock. Jermin said: “To date Transense has fully delivered against our forecasts in spite of the limited visibility of revenue streams and has invested some of the iTrack royalty in developing the real potential that resides in the Translogik and SAWsense businesses as well as financing share buybacks.”
He continued: “[…] we are reducing our forecasts for FY24 and FY25. FY24 PBT is reduced to GBP1.3m (previously GBP1.7m), still [year-on-year] growth of 50%, and EPS from 11.5p to 8.9p. For FY25 we are bringing back PBT by 22% from GBP2.06m to GBP1.61m (y-o-y growth of 24%) and EPS from 13.6p to 10.7p. While disappointing, [Transense] is still expected to deliver strong y-o-y growth and we are confident that prospects remain exciting for Transense as this growth continues, albeit at a rate slightly lower than previously forecast.”
Bridgewise, the AI-analyst recommends Transense as a ‘Buy’. The analyst said: “Transense Technologies’ recent financial results position the company within the top 10% of Consumer Discretionary firms. Specifically, Net Change in Cash and EBITDA, Lease Adjusted overperformed relative to its peers. Analyzing past performance, stronger relative performance in these metrics has often been associated with a higher likelihood of a company’s stock outperforming industry competitors. Considering Transense Technologies’ latest financial performance, the firm’s shares seem to be a compelling option for investment in the Automobile Components industry.”
Transense opened trading for the week (19th February) at 106p, up 18.4% over one-year, with its shares ranging between 77p and 120p. The company has a market capitalisation of GBP15.75m.