Gattaca Share Discussion Threads

[quepassa] 05/4/2018 17:08

Recent posts refer.

150p increasingly in sight. And now tumbling precipitously.

If it hits 150p in next few days, cannot rule out possibility in my view that 100p will be breached.

ALL IMO. DYOR.
QP

[wilmdav] 30/3/2018 18:38

There is a semi-reassuring note about IR35 on page 20 of the 2017 Annual Report.

Half-year results are due on 19th April.

I still hold these and have only just got round to reviewing them following the profit warning of 7th February.

I suppose a new CEO might want to cut the dividend further to increase growth prospects but that seems unlikely. George Materna, founder and deputy chairman, owns 25% of the shares and he is already taking a 50% income hit.

On 22nd February Intrepid Capital Management Inc. bought 7.8% of the shares, which was encouraging.

Adjusted eps is forecast to drop from 35.3p to 29.0p in 2018 and then grow at around 10% per year for 2019 and 2020.

There is certainly scope for growth on the basis of current p/e and price/sales ratios but patience of the long term variety might be required. It remains a high income stock in spite of the drop, and will hopefully remain so.

[jimmywilson612] 27/2/2018 17:06

Seems like they've doubled their investment here.

The fundamentals do warrant it at these levels but the big unknown is IR35. I would rather wait until the government is clear what the outcome will be with this, even if that means buying in at a higher price.

[yellowdog] 23/2/2018 08:51

Intrepid Capital Management have 7% of Gatc which they seem to have acquired over a few days. Good news?

[jimmywilson612] 17/2/2018 10:15

I'm tempted at these levels.

Debt is high, but they paid out circa £10M in dividends last year (which was basically all their profit) so glad they're resetting the cover at 2x. Therefore they can, in my opinion, quickly reduce debt to more manageable levels.

The risk is the IR35 being included into the private sector. Whilst Perm/International is growing, circa 3/4 of revenue is from contract (I'll assume most from within the UK).

If you include International/Perm fees together, this is circa half of NFI. Therefore any change in legislation is going to have a massive effect on the bottom line.

As mentioned, tempted at these levels, but might keep the powder dry until the government shows their cards.

[che7win] 10/2/2018 16:48

They're cheap if they meat forecasts, unfortunately they don't seem to be able to.On my watchlist.

[arthur_lame_stocks] 10/2/2018 16:22

These don't look particularly cheap to me even after the price fall. I don't think i'd risk it with all that debt they have.

[quepassa] 09/2/2018 10:35

Next stop 150p???


Beware the old adage that profits warnings come in threes.


ALL IMO. DYOR.
QP

[pugugly] 08/2/2018 10:45

All: Thought, as HM Gov is having a crackdown on consultants and personal service coys being used to reduce National Insurance Contributions plus increasing deductible expenses could there be a possibility that many of the "temporaty contrators" will be forced to be reclassified as "permenant employees" In which case might there not be erosion of NFI. Just speculation but has anyone direct experience of this scenario? - If correct could hit most of the recruitment sector.

[eastbourne1982] 08/2/2018 10:17

As I said a few weeks ago debt is a concern here, with the market becoming tougher and profits lower debt near 40 million is too much for a business valued at 63 million. These may be worth buying at some point however that point could be well into the future.

Over the years I have learnt if debt looks like it could get too big you don't go near the business even if it looks cheap.

There could be money to be made trading this between £1.80 and £2.20 however I don't think it's worth the risk.

[quepassa] 08/2/2018 09:58

Just three months ago on 10th. Nov 2017 , Equity Development valued Gattaca at 380p and said 310p seemed to represent good value:



Price today? CEO quits. Likely dividend cut. Profits warning.



In my opinion, now that 200p has been precipitously breached (current showing at 195p), I personally in my view only cannot rule out the possibility that this share may or may not fall significantly further.

GLA .


ALL IMO. DYOR.
QP

[edmonda] 08/2/2018 09:30

For those wanting an external view on yesterday's announcements, first research note out earlier today with new forecasts. Free access here:

[pugugly] 07/2/2018 16:25

QuePassa - Any thoughts on what might be non recurring costs ? Not visited here before only looked in as top list faller - CEO gone - profit warning _ Fully agree wit coments about name change - What the hell does Gattaca stand of - Almost sounds like Gotchya - ie. We have screwed you !! Not a clever move - With the old name it was like a grocery product - The name is on the can - "We match technicians to the requirements of our clients"

Having read the thread - The announcements etc Many of the thread contibutors being well respected members of the community decision made to watch but not grab at this level - Sectorwise recruitment under major competitive pressure (imo)

Or am I making a mistake somewhere?

[quepassa] 07/2/2018 14:58

BIG PROFITS WARNING;-

"Notwithstanding these savings, profits before tax excluding non-recurring costs are now expected to be in the order of 15% below the Board's previous expectations."

Dividend likely to be slashed.

CEO quits.

...not a good series of events....


Please come back Adrian Gunn.


This is fast going sub 200p in my view.


In addition to brolly and shamrock, I now recommend hard-hat and brown trousers.

ALL IMO. DYOR.
QP

[mammyoko] 07/2/2018 14:40

Fired. Quite right too. He has been useless

[mammyoko] 07/2/2018 14:37

Inevitable. Div was being for out of borrowings!

[spectoacc] 07/2/2018 14:31

Hmm:

"("Gattaca" or, "the Group")
Directorate Change - Resignation of CEO
The Company today announces that Brian Wilkinson has tendered his resignation as Chief Executive Officer as he wishes to retire from full time executive roles. He will step down from the Board with immediate effect. In line with his contractual obligations, Brian will be available to the Company during his notice period.
Accordingly, the Board has commenced the process to recruit his successor as Chief Executive Officer and will look both externally and internally. "

[quepassa] 05/2/2018 18:48

5 Year LOW for Matchtech/Gattaca.

Bottom-drawer performance.



My guess is that this will be testing the 200p level in the ntdf and perhaps tumble through it.

Weak small cap stocks are being caned by the market.

Large scale Woodford fund redemptions are in my view not helping the sector.



GLA but carry a brolly and a shamrock.


ALL IMO. DYOR.
QP

[briangeeee] 17/1/2018 20:58

OK, understood. Guess it was nervousness about the previous unknown degree, and maybe also the sector and stage in the cycle.

[stemis] 17/1/2018 12:51

No, I mean't a potential write off of under £100k and a loss of net revenue of a maximum £500k was hard to reconcile with a loss in market value, due to the share price fall, of £9.5m...

[briangeeee] 17/1/2018 12:12

SteMiS, wondering what you mean is hard to reconcile? There are clearly quite a few variables. Simplistically........

What's the net revenue with contract staff? Maybe 10%?

So, if they have £0.5m net revenue, that's maybe £5m gross. It's presumably billed and paid monthly, with maybe 45 debtor days. That might be £0.625m owing by clients.

Of this, the majority is credit insured, leaving sub £0.1m uninsured exposure. The biggest unknown here is the degree of insurance cover, and at 85%, then that would make the numbers seem sensible.

[cwa1] 17/1/2018 11:04

Thanks for that. Small snippet(not much else really) from it here:-

However, contrary to yesterday’s 10%+ plunge in the stockprice, Gattaca said this
morning that its net balance sheet exposure to Carillion was “less than £100,000”;
– with existing contracts contributing Net Fee Income of around £0.5m pa.
To us, given Gattaca is forecast to deliver FY18 NFI of £79.3m (£74.7m LY), then this
is not material. Sure, it’s something to watch, but management have been carefully
monitoring the situation for some time, and accordingly arranged credit insurance
to cover any bad debts. Moreover they have been “actively engaging with the relevant
Carillion counterparties to ascertain how to support the related underlying projects” in
order to ensure continuity of service.
Consequently, we make no change to our numbers or 380p/share valuation, and
in fact have been impressed by the Board’s risk management strategies and prompt
actions. Indeed we look forward to the H1’18 pre-close trading statement on 8th
February, where we expect to hear news of a gradually improving demand picture - led
by continued strength in International and UK Engineering, alongside further recovery in
UK Technology.

[edmonda] 17/1/2018 10:50

after company RNS states 'minimal' exposure to Carillion, ED update note now out confirming forecasts and valuation. Free access to it here:

[stemis] 17/1/2018 09:47

Despite the announcement the price seems to have settled 30p lower (290p -> 260p). That equates to a loss of £9.5m in market cap.

Hard to reconcile that to a balance sheet exposure of <£0.1m and an annual net fee income of ~£0.5m.

[stemis] 17/1/2018 08:17

So no real impact. All the work that Carillion did will need to continue, either in the JVs or by the counterparty and I'd have thought there was actually a greater need for contractor staff whilst the mess is sorted out.

The statement also does confirm, in a roundabout sort of way (by the absence), that there are no other reasons for the share price movement i.e. trading...

That's my take.