There are many challenges facing the UK economy, but a company that we think is ahead of the recovery curve is STEM recruiter Gattaca - having already ‘cut its cloth’ over the past 2 years. Plus, the UK job market still remains the tightest it’s been for years, with 1 vacancy for every unemployed person – particularly across their sweet spot of ‘difficult-to-find’ engineers and technologists, where widespread shortages exist.
At today’s FY’22 results, the group posted in line numbers, with adjusted PBT coming in at £0.3m on NFI up +5% to £44.1m. It also added that “demand is robust” which - alongside further self-help measures, favourable mix & an industry shift towards using more contractors vs permanent placements (re austerity) - is expected to lift FY’23 underlying PBT to £2.5m with profits being H2 weighted. The dividend has been prudently suspended, whilst the balance sheet remains rock solid, sporting net funds of £16m (or 49p/share) as at Jul’22, after generating strong H2’22 cashflow.
It was tempting to upgrade our modest FY23 forecasts & 160p/share fair value, but we prefer to conservatively retain both pending December’s AGM trading update. Nonetheless, we note the stock at 80p trades below NTAV (86.5p/share) and on a 0.4x EV/NFI multiple vs peers at >1.0x
