21 Mar 2019

Crosby Research: Vixtel Technologies (1782 HK/BUY): From APM to 5G Virtualization monitoring

Vixtel reported FY18 results with revenue in 2H18 only edged up 1.2% YoY to Rmb57.8m, due to sluggish economic conditions in China and clients delay project launching. Gross margin widened 2.1ppt YoY to 62.1% on increasing revenue contribution from high-margined big data analysis platform. Admin costs as percentage of revenue increased from 14.4% in 2H17 to 17.5% in 2H18 mainly due to fees for application of listing on the Main Broad from GEM. FY18 net profit came in at Rmb27.9m, up 25.8% YoY. If we excluded the Rmb2.2m expenses of Main Broad listing transfer, recurring net profit in FY18 would be Rmb30.1m, up 35.7% YoY. Final year dividend of HK$1.2cents was proposed, same as FY17. Full year dividend payout ratio was 28.7%.