IPH Limited (ASX: IPH) confirms future plans for expansion

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IPH Limited confirms future plans for expansion

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Intellectually property services company, IPH Limited (ASX: IPH) has today presented at an Emerging Leaders Conference, outlining their current progression and plans moving forward. The company specified Consolidating acquisitions, organic growth, and growth step-outs as essential to their overall strategy.

IPH is Asia-Pacific’s leading intellectual property (IP) services company operating over 8 jurisdictions, under six different brands. The company offers a wide range of IP services across its divisions, Spruson & Ferguson, Practice Insight, Pizzey’s Patent and Trade Mark Attorneys and AJ Park. These subsidiaries offer protection, commercialisation, enforcement, and IP management. The company also provide large scale data analysis services for IP firms, assist foreign firms seeking to acquire Australian based patents and operate IP services in New Zealand, respectively.

IPH Limited’s presentation gave a brief look into how the company will facilitate future growth after falling sharply in 2020. The maintenance of the company’s ‘network effect’ will allow IPH to service clients in multiple jurisdictions and support revenues generated across its Asia Pacific platform. Recently established, the platform will support markets in China, Hong Kong, Indonesia, Malaysia, Singapore, and Thailand. Further, one of its subsidiaries AJ Park has acquired Baldwins IP to expand its operations and complement existing business. Baldwins IP was acquired for 7.9 million.

Prior to the Emerging Leader's conference, IPH released their FY20 results on the 20th of August 2020. The company recorded a 43 per cent rise in revenues to $370.1 million for the period. In addition to this, the company also saw rises in net profits after tax (NPAT) and underlying earnings before interest tax depreciation and amortization. To provide the appropriate platform for these results the company drew on its $20 million debt facility during March to support business operations and also its high divined payout. The company has already paid back 12.7 million of this debt and was able to pay out 82 per cent of NPAT as dividends. The final dividend was 28.5 cents per share, up 14 per cent.

Looking to their balance sheet, IPH has a leverage ratio of 0.6 times, supported by $82 million in cash and cash reserves. Due to its operations being spread across different countries the company is also exposed to foreign exchange (FX) movements. 55 per cent of cash is held in US Dollars and the company has a number of hedge positions in place to counter specific FX risks.

As of the 16th of September 2020, IPH is trading at $7.10 up 1.43 per cent on the day. Year to date however, the company has depreciated 30.53 per cent, hovering at levels not experienced since mid-2019. IPH’s FY21 priorities were established across six areas; to leverage their ‘network effect’, continue margin expansion and operational efficiencies, consolidate corporate services, employee development, digital platform development and continued acquisitions.

Caroline Wong

Caroline Wong is a Research Analyst at KOSEC – Kodari Securities. She writes on markets and focuses on ASX Top 300 companies. Email Caroline at c.wong@kosec.com.au.

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