Vislink

A major restructuring over recent months has left communication services specialist Vislink (VLK) in a strong position to capitalise on growth in its markets.

Recently installed executive chairman John Hawkins admits, 'It was a business that had lost its way, with too much middle management.' Now much leaner, having stripped up to £7m of annual costs from its overheads, the fully listed concern is in rude health.

A recent strategy update confirms that trading is in line with expectations. Indeed, the quarter to September revealed a swing to operating profits of £600,000, compared with a £1.9m loss last time. Over the same period, sales jumped 24% to 14.8m, with organic growth a respectable 6%.

Vislink's core competency is to collect and deliver high-quality video and associated data from the field to the point of use. It has a strong position in the broadcast market for live news, sports and entertainment, as well as the law enforcement sector, where it works for law enforcement and other public safety clients.

The global broadcast contribution sector is valued at £230m and is expected to grow to £270m by 2015. Vislink is seeking opportunities to expand beyond its traditional markets, which will include defence, mining and utilities. Following a £5m tender offer, in June it acquired wireless camera manufacturer Gigawave for up to £3.75m, a move that has gone well. But even after this, Vislink still retains a chunky net cash balance of £8.2m.

Broker Daniel Stewart predicts a 2011 loss of £300,000, switching to a £3.6m pre-tax profit in 2012, producing EPS of 1.8p. Recently appointed non-executive Andrew Sleigh has shown his intent by picking up 250,000 shares at 19p. We suggested in August that Vislink was due a rerating when the price was flat at 17.5p, and it now appears to be taking shape. Long-term buy.