We are all as individuals aware of pent up consumer demand as households emerge from lockdown with £150bn of extra savings squirreled away over the last 12 months. Such optimism is feeding through into house prices, bank stocks, equities... and the jobs market.
Specialist STEM recruiter Gattaca is seeing similar trends too. Today reporting sequential LFL NFI growth over the past 2 quarters, alongside “improving activity rates”. Particularly in relation to hiring talent in renewable energy (eg offshore wind), defence & all things tech related.
Furthermore, infrastructure projects (eg HS2, fibre-to-the-home, Lower Thames Crossing, EVs, etc) are starting to gain traction, augmented by buoyant demand for cloud, m-commerce, cybersecurity and AI expertise. All positive tailwinds in light of Gattaca’s rich STEM, contractor (75% of H1’21 NFI - flexible working) and UK heritage.
Q2’21 NFI climbed 2% sequentially vs Q1, which itself was 9% higher than Q4’20. All told H1’21 NFI came in at £21.1m (-34% vs £31.8m LY) with Solutions accounting for 25% (28% LY) - delivering adjusted PBT of £442k. Consistent with our FY21 forecasts of £750k, reflecting tight cost control & £4m of annualised savings thanks to the ‘Improvement Plan’.
On valuation, even after the recent price appreciation to 152p GATC shares still trade on modest FY22 multiples of 7.6x EV/EBIT & 11.5x PER vs 12.9x & 19.5x for peers. We upgrade our valuation from 140p to 225p per share – factoring in a lower risk premium, greater clarity and a UK government that is committed to driving employment & infrastructure investment.
