Gattaca
Ticker: GATC Exchange: AIM www.gattacaplc.com

Gattaca, formerly listed as Matchtech Group, has over 30 years' experience providing niche recruitment services to the engineering, technology, professional staffing and the employability & skills markets.  The Group is recognised as the UK's leading specialist recruitment agency providing contract, professional contract and permanent staff.

One of the best placed 'reopening' stocks

Although it may not feel like it for the 1.7m people who are unemployed - but despite the lockdowns, UK employment prospects are steadily improving thanks to the country’s successful vaccine rollout. The only slight frustration is that this optimism hasn’t yet translated into a surge in recruitment activity, albeit we suspect a rehiring boom is only a matter of time, especially for STEM recruitment specialist Gattaca.

Today the company said that Q2’21 NFI had climbed 2% sequentially vs Q1, which itself was 9% higher than Q4’20, and reporting H1’21 NFI of £21.1m (-34% vs £31.8m LY). Adjusted PBT was consistent with FY21 expectations (ED £750k) after benefitting from tight cost discipline & the faster realisation of ‘Improvement Plan’ savings. Net cash (pre IFRS15 & 17) closed Jan’21 at a healthy £22.9m, excluding deferred VAT and non-recourse debt.

Looking ahead, our FY21 & FY22 adjusted PBT forecasts have been left unchanged, with FYI NFI anticipated to climb +28% vs -20.8% in FY21 – although the exact timing of this inflexion point remains uncertain.

Despite recent share gains the stock at 100p still trades on modest FY22 multiples of 5.2x EV/EBIT and 7.6x PER, well below 12.1x & 20.2x for the peer group average. We retain our 140p/share valuation, and would expect an upwards re-rating as favourable operating leverage kicks in.

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