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 returns to growth though margins hit by project start up costs
Norcon plc | Download | Published on 26/09/2011Telecoms consultancy Norcon has reported a return to revenue growth in the first half, with revenues up 5% to $35.9m. As guided by the company, margins were impacted by start up costs on new projects, reflecting the company’s diversification strategy, but these new projects and clients should help sustain growth going forward. Norcon shares, at 38.5p, are down 40% since it warned of project delays last December, valuing the company at just 2.9x EBITDA and 6x PE for 2011, whilst the as yet to be announced dividend will probably give an attractive yield. These multiples are well below the megabuyte Consulting and Systems Integration peer group averages of 6.1x and 9.7x respectively, which seems harsh given that the company is still nicely profitable and this latest half, whilst down on 1H last year in profit terms, was a significantly better half in revenue and profit terms than the preceding 2H of 2010.