FY’22 NFI set to climb 7% as investment kicks in

Due to the latest Omicron outbreak, the pace of economic recovery has temporarily hit a soft patch. But growth should pick-up soon, particularly as Omicron burns itself out, whilst unemployment further declines amidst record numbers of vacancies and acute job shortages.

Given the uncertainty, Gattaca said today that it was seeing a “delayed recovery in its contract business (c. 75% NFI) where demand has been slower than expected.” Albeit,  greater resource has already been invested in UK sales headcount (+24% vs Jan’21) in anticipation of a rebound.

So, despite a 46% jump in Permanent placements (re RPO activity), overall group NFI is now predicted to climb +7.2% to £22m in H1 (£20.5m LY), +6.7% for H2 (£23m vs £21.6m) and +6.9% in FY22 (£45m vs £42.1m LY & ED est £50.5m B4), and adjusted PBT falling to “breakeven.”

Longer term fundamentals look positive, especially in Gattaca’s sweetspots of software, digitisation, renewables (eg off-shore wind & hydrogen), electrification, defence (cyber & marine), engineering and infrastructure (eg HS2, fibre-to-the-home, Lower Thames Crossing, etc). For now, we reduce our forecasts for this year & next, with our valuation falling from 285p to 165p/share.