The IPH share price is edging higher after the company released a positive annual report. It has delivered solid results in a difficult year.
The post Here’s why the IPH (ASX:IPH) share price is edging higher appeared first on Motley Fool Australia. –
The IPH Ltd (ASX: IPH) share price has this morning edged higher after publishing its annual report before market opening. At the time of writing, the IPH share price has increased 0.41% to $7.36. This came after the company reported a 42% jump in underlying revenues, and a 24% increase in underlying net profit after tax (NPAT). IPH focuses on patents and trademarks. In fact, it was the first IP (intellectual property) focused company listed on the ASX.
IPH has been undertaking a growth strategy underpinned by buying and integrating smaller firms. Moreover, during FY20, the company integrated its acquisition of Watermark into its Griffith Hack firm. In addition, it completed the integration of Xenith IP after an initially contentious acquisition. The mergers have enabled the company to reduce operating costs and offset lower client filings due to pandemic lockdowns.
Across the company’s operations, the Asian IP business saw an increase, while the Australian and New Zealand businesses declined by 5%. Specifically, the Asian business saw a like-for-like revenue increase of 6% and like-for-like earnings before interest taxes, depreciation and amortisation (EBITDA) of 8%. Furthermore, EBITDA margin increased from 41.3% to 42.2%. I believe the growth in its Asian market share should bolster the IPH share price as a predictor of future performance.
Highlights of IPH’s Asian sector performance included Singapore, where the company retains its leading patent market share position with 23.3%. Moreover, the company remains the patenting market leader in Australia with combined group patent market share of 36.5%, and has the number one position for patents and trademarks in New Zealand.
An interesting highlight for me personally was the continued growth of the company’s software-as-a-service (SaaS) platform called WiseTime. This product is designed to increase billable time for attorneys. As such, it provides a tech company aspect to boost the IPH share price further.
Outlook for the IPH share price
Maintaining leading market positions and growing ancillary markets are IPH’s strategic priorities in FY21. This means taking some time to digest recent acquisitions, both in Australia and New Zealand. Nonetheless, the company remains on the look out for potential acquisition targets while focusing on its organic growth.
At the time of writing, the IPH share price is up 3.66% over the past five days’ trading, and is currently paying a trailing 12-month dividend yield of 4%.
The IPH share price remains a good investment in my view. The company has been in a perpetual growth stage since listing on the ASX via acquisitions. In addition, it was able to deliver solid results despite the global pandemic.
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Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends IPH Ltd. The Motley Fool Australia has recommended IPH Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.