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Canadian wireless technology supplier poised for growth, even profit

Ron Walter writes about Baylin, an Ontario-based communications company
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Bizworld by Ron Walter

An Ontario company playing in the wireless communications industry appears set to post increased sales and profits in the coming years.

Baylin Technologies of Markham, Ontario designs, develops and manufactures radio-frequency and amplifying devices for the wireless communications sector with 800 clients on a worldwide basis.    

One division provides sensitive equipment for military, government and infrastructure clients.

The continued development of 4G communications systems and the new 5G systems will benefit Baylin sales tremendously as the need for ever more towers using the equipment made by Baylin grows.

This part of the wireless business is highly competitive but once a carrier chooses a supplier they tend to stay with that supplier. 

This supplier relationship partly explains the American president’s obsession with Chinese technology, specifically the Huwaei corporation, which threatens to dominate 5G.

Since 2013 Baylin has increased the customer base from 130 to the current 800, also reducing reliance on large single customers.

Last year Baylin invested around $75 million acquiring two companies, Advantech and Alga. Advantech supplies critical equipment to military, government and infrastructure customers. Alga business comes from radio frequency microwave amplifiers and radar amplifiers.

Five company research and development facilities operate to keep the company abreast and ahead in new product design and development. Baylin spent $15.3 million, or almost nine per cent of revenues on research and development last year.

Revenues soared last year by 48 per cent to just over $170 million, but the company posted a loss of $3.8 million compared with a loss of $4.2 million in 2017.

Last year’s loss was affected by acquisition costs.

In fact, Baylin hasn’t turned a profit since 2013 when operations earned $829,000 but has been cash flow positive for these last five years.

Debt sits at $30 million, up from zero in 2017, the year before the two acquisitions.

Manufacturing captures lower costs with facilities in China, Korea and Vietnam as well as Canada and United States.

Sales grew handsomely last year in all four major global regions with highest growth rates – doubling in North America and showing a seven-fold increase in Europe, Middle East and Africa.

At a recent share price of $3.82, Baylin shares are in between the low of $2.90 last June and the high of $4.50 on February 11.

Contrary to the rest of the market Baylin shares seem to be moving lower in the short term but future potential could create another Canadian high tech giant.

CAUTION: Remember when investing, consult your adviser and do your homework before buying any security. Bizworld does not recommend investments.

Ron Walter can be reached at ronjoy@sasktel.net

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