Trading in line with expectations

Despite macro uncertainties (eg Brexit & US/Chinese trade tensions), it is nice to hear positive news about a great British technology success story. 

On Tuesday (7th) Kromek – an IP/science rich firm which develops cutting edge gamma and x-ray detectors for the multi-$bn medical imaging, homeland security and nuclear screening industries -  said that it “expects to report revenue growth for the full year 2018/19 and EBITDA profit in-line with market expectations.” Implying a strong H2’19, with the Board continuing “to look to the future with confidence”.

Indeed, only 9 days ago the company secured a $2.7m expansion order - to be recognised over the next 24 months - under an existing 5 year security screening contract (now worth a minimum of $5.8m). In turn, further building the orderbook (ED est. $90m+) and improving visibility (ED est. >70% for FY20).

Although our forecasts and 35p/share valuation remain unchanged, we believe there is scope for upgrades in due course, particularly given the group’s modest FY20 EV/sales multiple of 3.6x vs peers at 5.7x.