Norcon plc (NCON)
ISR viewNorcon enjoys stable, long term consulting relationships with telecom operators, delivering consistent revenue and profits growth and a high dividend payout.
Norcon looks forward to growth resuming
Norcon plc | Download | Published on 12/04/2011As well flagged in December, telecoms consulting specialist Norcon has reported a challenging 2010, in which project delays and higher costs have impacted profitability. However, year end cash was better than expected and discussions with the company suggest that the outlook for 2011 has improved, with the prospect of a return to growth. We have therefore revised upwards our forecasts; revenues by 1.6% and PBT, EPS and DPS by 11-12%. Even with revenue declines, Norcon was still profitable and cash generative for 2010, and the 50% dividend payout policy would imply a yield of 5.5% for 2010 (and the company holds out the possibility of a higher payout). Given a lowly 7.8x PE, the shares should respond well to tangible signs of growth returning.