Wireless tech company Baylin Technologies (Baylin Technologies Stock Quote, Chart: TSX:BYL) is ready for its closeup, says Stephen Takacsy of Lester Asset Management, who argues that with the rollout of the Internet of Things worldwide, the small cap company looks to have multiple decades of growth ahead it.
“We really like Baylin. It’s our second-biggest position right now,” says Takacsy, President, CEO and Chief Investment Officer at Lester, to BNN Bloomberg. “They’ve made a few acquisitions that have positioned them in pretty much all the sectors of wireless antennae.”
“They started off with handsets — their big customer was Samsung — and now they’re dealing with all the big telecom companies,” he says. “Just think of all the microcells that’ll have to be put all over the place for the Internet of Things, for WiFi, for self-driving vehicles … whatever the future holds.”
After trading in the low $2.00 range for a couple of years, Baylin took off over the back end of 2017, hitting a 12-month high of $4.29 by late September of this year. Since then, the stock has slid back to the low $3.70s.
The company last reported quarterly earnings on October 31, where it generated revenue of $38.2 million, a 41 per cent year-over-year increase, with an Adjusted EBITDA of $7.1 million, more than double the $3.1 million of a year earlier.
“We’re looking at a company that’s going to have huge growth potential for the next 20 years, especially when the 5G networks start rolling out in North America,” says Takacsy. “Meanwhile, their sales are booming overseas as developing countries catch up to North America. They’re also positioned for satellite bay stations.”
This past July, Baylin closed on a $17.3-million bought deal offering of subscription receipts and 6.5 per cent extendible convertible unsecured debentures, which management says will go towards financing its major purchase of Alga Microwave, for working capital and general corporate purposes.
“This company should be trading well above where it’s trading now,” says Takacsy. “Some people are waiting to see further signs of profit growth but they’re already showing really good EBITDA margins and we’re expecting double-digit growth next year.”