Why our tip from 2014 is still a good DiscoverIE

WITH the UK’s corona virus vaccination programme surging ahead of almost every other country, more than ten million people have now received at least one dose of vaccine.

Many of those shots have come from Pfizer, the US drugs giant whose vaccines have to be kept at minus 70 degrees Celsius.

Transporting the medicine at such low temperature is challenging but DiscoverIE, an electronics company based in Guildford, Surrey, is helping to make it happen – not just in Britain but across the world.

DiscoverIE specialises in complex, electronic parts, including sensors that ensure products are kept very cold.

Goods are made to order for manufacturers worldwide, from GE and Siemens to hundreds of smaller businesses across Europe, America and Asia.

Midas recommended the shares in 2014 at £2.32 and looked at the shares again in 2019, by which time they had increased to £4.07.

Stewarded by longstanding chief executive Nick Jefferies, they have since risen by another 65 per cent to £6.72 – and they should continue to gain ground.

When Jefferies took the helm in 2009, DiscoverIE, then known as Acal, was principally a distributor, selling electronic widgets made by third parties.

Over time, that focus has shifted and today, two-thirds of sales come from kit that has been designed and made by DiscoverIE in-house.

Jefferies has also steered the firm towards four key markets – medical equipment, transport, renewable energy and industrial automation and connectivity. Components include power units for MRI scanners, door controls for trains, kit that measures airflow in wind turbines and telematic gadgetry so that companies can monitor where goods and lorries are at any given time.

DiscoverIE is well known for its temperature sensors too, used not just in vaccine distribution but also to make sure batteries do not overheat in electric vehicles and coffee comes out just right in Nespresso machines.

All told, the group operates in around 27 countries, making some 40 million products a year. Design and development are often carried out here in the UK but 90 per cent of sales are generated overseas.

Making many different products, selling them in dozens of countries and focusing on markets with good long-term prospects all make DiscoverIE more resilient than many peers.

Figures were down at the half- year to September but the numbers were better than many competitors.

Jefferies also said the second half had started well and a trading update, out this week, should confirm that momentum has continued in recent weeks. Brokers expect a 4 per cent decline in revenues to £448 million in the year to March, with profits down 16 per cent at £27.5 million.

A dividend of 10.1p is forecast, however, up from 3p last year, when the final pay out was suspended.

Results should bounce back in the next financial year and beyond. In 2018, Jefferies said he wanted to double profits by 2023, a target that was going well until Covid.

The timing may now be delayed by a year or so but the ambition remains, driven by organic growth and acquisitions.

There is an environmental angle too, as the group has pledged to reduce carbon emissions in the next five years and its products are designed to help make the world greener.