SP drifting lower again…. |
52weeks low was 60p |
Bounce off the 52w low? |
Trading results no good, revenue down means commission down |
 Trading report in-line with sector peers (new research report - link below)
The results for the six-months to January are robust against a backdrop of declining confidence in both clients and candidates generally. With an improvement in the contract book during early Q3 we think this highlights that the tide is starting to turn and likely to feed through to demand for permanent hires ahead of the CY24 end. With net cash accounting for over 70% of the current market capitalisation, the operating business appears undervalued.
H1 results were broadly in line with expectations, as declining economic confidence reduced NFI by 12.8% yoy, with the UK down 10%. The decline in perm activity was largely responsible for the shortfall, with contract activity remaining robust during the period. Adjusted PBT improved modestly and adj. EPS was unchanged yoy at 1.6p.
Costs have reduced further, although Management continues to add headcount in its core areas of focus and strength. Also several new contracts/renewals were awarded during the period: these are likely to benefit H2 onwards and reflect a resurgent Business Development team.
We have taken a more conservative view of the outlook, reducing FY24 estimates in line with new guidance, albeit still anticipating meaningful growth in activity levels. The operating business excluding the net cash is valued at just £10.5m which seems too low given our EBIT forecasts. As such, we set a fair value of 140p / share.
Link to research report: |
Trading report in-line with sector peers (new research report - link below)
The results for the six-months to January are robust against a backdrop of declining confidence in both clients and candidates generally. With an improvement in the contract book during early Q3 we think this highlights that the tide is starting to turn and likely to feed through to demand for permanent hires ahead of the CY24 end. With net cash accounting for over 70% of the current market capitalisation, the operating business appears undervalued.
H1 results were broadly in line with expectations, as declining economic confidence reduced NFI by 12.8% yoy, with the UK down 10%. The decline in perm activity was largely responsible for the shortfall, with contract activity remaining robust during the period. Adjusted PBT improved modestly and adj. EPS was unchanged yoy at 1.6p.
Costs have reduced further, although Management continues to add headcount in its core areas of focus and strength. Also several new contracts/renewals were awarded during the period: these are likely to benefit H2 onwards and reflect a resurgent Business Development team.
We have taken a more conservative view of the outlook, reducing FY24 estimates in line with new guidance, albeit still anticipating meaningful growth in activity levels. The operating business excluding the net cash is valued at just £10.5m which seems too low given our EBIT forecasts. As such, we set a fair value of 140p / share.
Link to research report: |
Nope. I was surprised that the share price held up as well as it did though. I was expecting sub 100p. It's too risky for me to buy now, just look atthe rns they had. I still hold half but will wait for things to settle before making any firm decision. I'm usually wrong on these things, so as always dyor etc. |
Any ideas for the results? |
I think interims are on the 16th |
I agree with you, I reduced on 'news' :
The half-year demonstrated a a higher ratio of contract to permanent income, at 76% to 24%, respectively. This compares to a 68% to 32% split in the first half of financial 2023. Gattaca said that this reflects its increasing focus on contract marketing and maintaining contract volumes.
Permanent net fee income was down 38% from the previous year, which Gattaca chalked up to "market weakness", as well as the exit of a large permanent recruitment process outsourcing client at the end of financial 2023. |
Feeling will not be good results next week |
Yes I did lol |
I picked up some stb over thew last week or so. GL BH, I hope you made something off currys.
:op |
Bought some GNC today |
Looks like going to drop , all selling today |
Money moved to GNC |
"Profit expectations maintained"
We are encouraged by several aspects of the pre-close trading update covering H1, not least the outcome and movement in net cash. A renewed focus on the cost base should result in improving conversion rates, offsetting any further shortfall in fee income during H2. We also remain confident that a recovery in Gattaca’s markets should emerge during Q4 ‘24/early FY25 supporting a further re-rating of its shares.
The yoy shortfall in NFI of 16% during H1 includes a large RPO contract which ended in September. The H2 ‘23/H1 ’24 comparison is as a result more favourable, with the larger contract included for just two months of the former period, with fee income down 8.6%. Overall, contract NFI was more stable, declining 6% yoy, compared to 38% in perm.
H2 ’24 onwards will witness a greater focus on productivity, resulting in outgoing sales heads in the business not being replaced and further room for cost cutting within perm focused employees. Over the medium term, we expect administration headcount as a proportion of total heads to move towards best industry practice of c.25%, down from the current 32%.
Should we be proved correct on expecting a recovery in the Group’s markets then the current valuation appears too low. Based on a DCF model we retain our fair value / share at 175p.
New research report here: |
The two brokers have updated that forward profit expectations and guidance are maintained. I think the results look quite good given the situation of the company (ie it’s a huge recovery play valued at just above cash level and on 1 months revenue…) |
Not stellar, but not a disaster. Share price is hardly flying anyway so don't expect to see sub 100. |
Disappointing results , share price will be hammered |
Leaky? Tomorrow will tell |
Not necessaily. It was down last time but pre & post tax profit went up. Can't believe you were trying to sell recently, although I do not know what other opportunity came your way. Today's rise has been on minimal trading. |
If revenue down then will be problem |
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