CML Microsystems ‘full upside’ realisable from strong market position (LON:CML)

Miton UK MicroCap Trust plc (LON:MINI) Co-Fund Manager Gervais Williams was asked his view on one of the investments in the Trust, CML Microsystems plc (LON:CML), in a recent wide ranging interview.

DirectorsTalk asked: CML Microsystems have really delivered in terms of financial growth: 6 month results were ahead of both management and market expectations, and the full year is looking just as strong. What do you put this tremendous success down to?

Gervais Williams commented:

“This is a business that is involved in sophisticated electronic components where it has a very strong market position. They sold one of their businesses, they bought it in cash, they’ve got £24 million on the balance sheet for a company which is only valued at £77 million at the time of speaking . Most particularly, they’ve been using that cash now, they’ve just bought Microwave Technology which appears to give them an even stronger market position worldwide.

Most particularly, CML Microsystems is now in a position where they are likely to generate substantial cash – the analysts forecasting for the next couple of years 6% or 8% cash flow yield. It’s that cash generation, again with this low valuation where although they’re succeeding, they haven’t really had the full upside.  This opportunity for investing exists in many microcap companies across the UK stock market.”

CML Microsystems Plc develops mixed-signal, RF and Microwave semiconductors for global communications markets.

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