[SharePad] Screening For My Next Long-Term Winner: Zytronic

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10 November 2018
By Maynard Paton

You might recall from the other week that I decided to unearth the market’s most reliable dividend payers.

My theory was simple — companies with illustrious payout records should provide much more reliable returns during market setbacks than a collection of more speculative shares.

I therefore employed SharePad to identify companies that had lifted their dividend every year for at least the last ten years… and by a compound average of 5% or more.

I also limited the search to companies that offered a forecast payout yield of 4%-plus.

My initial screening pinpointed PayPoint — although my SharePad trawling did reveal another interesting name: Zytronic.

You see, this particular small-cap also boasted an extended history of rising dividends…

…but in addition, offered a 5.7% forecast yield and net cash that represented a substantial 22% of its market cap.

Simply click here to read my Zytronic article for SharePad.

Maynard Paton

2 thoughts on “[SharePad] Screening For My Next Long-Term Winner: Zytronic

  1. Roger Brocklehurst

    Hi Maynard,

    Thanks for this analysis of Zytronic, a share that we’ve both looked at for some time.

    I’m not sure that the update in Oct 18 was such a modest profit warning. There seems to been a rather important decline in orders from the Financial sector (Described in the Prelims 12/12/18)… and some of the reasons given seem structural rather than just delayed orders.

    Sales:

    The second half trading revenues of GBP11.7m showed a 10% improvement on the GBP10.6m reported for the first half. However, as detailed at the interims, first half revenues were affected by the performance of the Financial market (comprising ATM touch and non-touch products), which at GBP2.8m was GBP1.1m lower than the prior year (H1 2017: GBP3.9m). The second half performance was also impacted by the Financial market, but to a lesser degree, as the improvement in the level of sales did not materialise as quickly as hoped. As a result, the total impact was GBP1.3m of reduced Financial sales for the full year, composed of GBP0.9m of touch and GBP0.4m of non-touch.

    Touch sales

    Financial touch sales saw a decline on the back of total unit volumes falling by 6,000 to 44,000 units. We believe the observed decline has been down to several factors which have generally been felt by the larger ATM OEMs in the market. These were:
    * an imposed change in procurement practices in China for the Chinese market;
    * a slower than anticipated change to the outsourcing of ATM assembly to third parties;
    * the move by Financial institutions to a Windows 10 operating system from the previously deployed Windows 7 and the consequent delays caused in them placing new unit orders.

    There is also little doubt that consumer digital money management may be influencing future ATM deployment levels.

    Reply
    1. Maynard Paton Post author

      Hello Roger

      Thanks for the note. Yes, I am not really sure about ZYT. The firm has some attractive financial fundamentals, but you could well be right about lower cash-machine usage and the demand for replacements. A cynic would argue the firm is now dependent mostly on high-tech gaming machines, the social value of which is debatable.

      Maynard

      Reply

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