AIM shares round-up: Filtronic, IQE and GB Group
While the number of stocks on AIM is at a 22-year low, there are still plenty of high-quality growth companies to invest in. Graeme Evans studies updates from a few of them.
23rd July 2024 15:11
by Graeme Evans from interactive investor
Updates by Filtronic (LSE:FTC), IQE (LSE:IQE) and GB Group (LSE:GBG) today showcased AIM’s cutting edge in a week when it emerged the number of companies on London’s junior market is at a 22-year low.
From a peak of 1,694 listings in 2007, accountancy group UHY Hacker Young reported that the total is now down to 722 after 80 companies delisted over the year to 30 June.
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Just eight IPOs in 2023/24 compared with 58 the previous year, a trend that has increased the focus on the issue of red tape and next week’s simplified regime for London listings.
UHY Hacker Young partner Colin Wright said the AIM market has had to do battle with the idea that growth companies would be better off listing in the US or elsewhere in Europe.
He added: “Businesses are beginning to realise that listing in the US is by no means a bed of roses – companies listing in the US do not get an easy ride. However, more needs to be done to remake the arguments in favour of listing on AIM.
“It would be great to see the new Government helping to encourage more reforms to help AIM get back to its undisputed leadership position for smaller growth companies.”
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Among the AIM stocks reporting today, the shares of IQE, GB and Filtronic have rallied by between 26% and 250% so far this year.
The best performing of the trio is the wireless communications firm Filtronic after April’s announcement of a strategic partnership with Elon Musk’s SpaceX.
The agreement will see the Leeds and Sedgefield-based company supply modules across multiple frequency bands core to SpaceX’s Starlink platform.
As part of the partnership, SpaceX has committed to ongoing orders for the next five years to ensure Filtronic remains a key part of its supply chain. The company has also issued warrants that will enable SpaceX to subscribe for up to a maximum of 10% of shares.
Today, Filtronic announced a follow-on production order worth about £7.1 million alongside the vesting of warrants equivalent to 4% of the company’s share capital.
Chief executive Nat Edington said: “The order demonstrates the continued significant role we are playing in helping SpaceX achieve their mission."
The update by Cardiff-based IQE, which supplies compound semiconductor wafer products and advanced material solutions, showed revenues at least 25% higher to £65 million in the six months to 30 June.
The performance represents another step in IQE’s recovery from an industry-wide inventory correction. Positioning for the upturn has seen the company accelerate diversification with new customer designs in power electronics and a broader push into the China wireless market.
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Chief executive Americo Lemos said: “As markets correct at varying paces, we remain confident in our diversification strategy which will enable us to take advantage of the growth opportunities ahead."
The shares have risen 35% to 31p this year, but Peel Hunt is backing IQE to reach 61p. While the sector is not out of the woods, the broker said that directionally and strategically IQE is in a far better place.
Digital location and identity business GB Group is also on the recovery trail, up 26% this year as it rebuilds after the dilutive acquisition of Acuant in 2021 and two years of subsequent downgrades as the pandemic tide went out.
At its AGM in London today, GB said improved momentum in Identity and resilient growth in Location continued from the final quarter of the 2024 financial year.
The company forecasts mid-single-digit revenue growth on a constant currency basis in the 2025 year, which will lead to high single-digit growth in adjusted operating profit.
Chair Richard Longdon said GB’s technological capabilities and “highly repeatable business model” left the group well placed to capitalise on significant growth opportunities and to “deliver significant and enduring shareholder value”.
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