Telit Communications CFO Yariv Dafna replaces Michael Galai on the board

Machine-to-Machine (M2M) communication specialist, Telit Communications’ (LON:TCM) finance firector Michael Galai is stepping down to be replaced on the board of directors by CFO Yariv Dafna. The company noted that Galai took the decision due to an increased workload in his other commitments, and he will stay on as vice president of Telit’s Legal & General Counsel.

Telit chief executive Oozi Cats commented: ''I would like to thank Michael Galai for his invaluable contributions to the board of Telit.  We are pleased that he will remain with the company as VP Legal & General Counsel ... (Yariv Dafna) has an in depth understanding of our business having worked within the Telit Group since 2003, and has been reporting to the board in his role as the company and group CFO since 2007."

At its AGM yesterday, Telit chief executive Oozi Cats told investors that the company expects to report strong year-on-year growth, over 50%, for the first half of the 2010 financial year despite being hindered by a shortage of certain components. Telit said it expects H1 2010 revenues to be approximately US$56m, and first half results will be published in September. Telit also confirmed that it expects to resolve the component shortage in the second half.
Today, in a morning note to investors, London-based stockbroker Astaire Securities said that Telit Communications’ (LON:TCM) strong first half suggests that its relocation of manufacturing to China, has been successfully executed.  The broker highlighted that the M2Mcommunications specialist continues to take market share in a growth market.

“Given the welter of newsflow yesterday, the strength of trading alluded to in the AGM statement may have been missed by many ... Telit is the number three in the global M2M market and demonstrating greater growth but continues to trade at a discount,”Astaire said.

In a separate analyst note, earlier this week, Astaire said the ongoing consolidation in the M2M sector was favourable for Telit, in view of the recent acquisition of Cinterion Wireless Modules by Gemalto, which it said showed the attraction of the M2M market as companies “looked to attach more things to the internet."

Astaire had commented that the acquisition showed the attraction of the M2M market with growth across multiple sectors, including smart metering and telematics. The consideration of 1x annual sales compares favourably with Telit’s current rating, with a market cap/FY10 sales ratio of 0.4x and an EV (enterprise value)/FY10 sales ratio of 0.6x.

“We would also flag that Telit has been consistently gaining market share as previous designs wins come through. Further consolidation in the sector is to be expected,” added Astaire.

Additionally, this morning, the company also announced the issue of 1.850 million share-options to certain directors and employees, at an exercise price of 32p. “The options have a vesting schedule whereby one third will vest in each June of 2011, 2012 and 2013.”

Oozi Cats was granted 1.1 million options, to take his current un-vested options to 3.1 million (2m million of which were granted in January 2009, and expire on 29/01/2014). Yariv Dafna was granted 200,000 option, taking his total un-vested options to 450,000 and Telit Chairman Enrico (Chicco) Testa received 250,000 options, taking his un-vested options to 1.5 million.