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QinetiQ holds a unique position in the global defence market, providing capability generation and assurance in challenging times. The company is working tirelessly with the UK MOD to provide world-class Test and Evaluation (T&E) facilities in the face of a tight budget environment. In addition, it is building its global footprint, leveraging both its technological expertise and global defence budget dynamics.
Companies: QinetiQ Group plc
QinetiQ’s strategy is focused on delivering efficiencies for the UK MOD and investing for medium-term growth. The Q3 trading statement reassures that underlying trading is in line with expectations and FY18 guidance is maintained.
The transformation at QinetiQ continues. The H118 report has demonstrated the contribution from recent acquisitions, the longer-term nature of contracts and the broadening international reach of the company. While the UK defence market is not without challenges, QinetiQ’s strategy is focused on delivering efficiencies for the UK MOD and investing for medium-term growth. Importantly, FY18 guidance has been maintained. We make small adjustments to our FY18 and FY19 estimates.
QinetiQ’s pre-close statement continued to show the group’s confidence in the outlook and highlighted that despite fears of UK defence slowdown, order intake was strong in Q2 and revenue under contract is as expected at this stage. With growth in Global Products also confirmed, supported by a combination of organic growth and the contribution from the Target Systems acquisition, both divisions are set to advance. We are therefore maintaining our forecasts and are encouraged by the progress in th
QinetiQ’s AGM statement reconfirmed the outlook even in an environment that remains uncertain post the UK election. While some order deferrals in EMEA Services have undoubtedly occurred, this was to be expected and management maintains the modest revenue growth expectation for the full year. This suggests confidence that such delays are likely be recovered during the year, leading to a more heavily weighted H2. Global Products’ results are more lumpy and dependent on timing of deliveries but fur
QinetiQ is a business in transformation. It has a new management team, a new campaign based strategy and it is proactively adapting to meet the new defence environment in the UK and US. Solid FY17 numbers saw the first organic revenue growth since 2014, which is encouraging, and management has maintained its expectations for FY18. Underlying momentum is building at the company. Order intake, contract wins and continued organic revenue growth will demonstrate whether or not the new strategy can t
QinetiQ CEO Steve Wadey has now got the bit between his teeth and is on a mission to expand the company internationally while exploiting growth opportunities in the core UK business. The recent acquisition of Meggitt Target Systems (MTS) seems to make strategic sense, both industrially and financially. This note introduces our FY18 numbers for the first time. Our new FY17 forecasts reflect the purchases of MTS and Rubikon and the £1bn amendment to the Long Term Partnering Agreement (LTPA) with t
As rates rise, "yieldy" stocks require careful consideration. Sustainability/track record key.
QinetiQ has announced a £1bn, 11-year contract amendment to the Long Term Partnering Agreement (LTPA) proving both extended visibility and the opportunity to attract increasing UK and international test and evaluation business. The agreement secures half of the core LTPA revenues at this year’s SSRO profit rates out to 2028, while providing QinetiQ with visibility to invest up to £180m in upgrading the UK air ranges and the Test Pilots’ School at Boscombe Down. This not only secures increased ca
QinetiQ’s July AGM statement highlighted that conditions remain as at the full year results, demonstrating that the group continues to deliver sustainable cash-generative growth. CEO Steve Wadey’s strategy is to drive the core UK business, expand internationally and ensure continued innovation underpinned by a transformation programme to improve customer focus and competitiveness. With c £275m of cash on the balance sheet and further cash generation expected in FY17, the group’s capital allocati
QinetiQ’s pre-close statement highlighted that the company is on course to achieve full year expectations. In addition to contract wins, the statement also highlighted the key outcomes from the Single Source Regulations Office (SSRO) baseline profit rate review. While this provides a level of certainty in the short term, further development of the rate for outer years is yet to be finalised consistent with management’s guidance for a moderation of margins in EMEA Services, as modelled in our for
QinetiQ’s pre-close statement highlighted that trading remains solid with order cover as expected in EMEA Services and performance stabilised within Global Products. With the Strategic Defence and Security Review (SDSR) and single source contract consultations underway, some decision deferrals continue as expected. However, QinetiQ is less likely to be significantly affected by individual programme decisions than product peers due to its broad service offering. With interims due on 19 November,
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Today’s trading update for H1 22 highlights the difficult operating environment over the first six months of the year, particularly in Q1. Trading picked up in Q2 and is expected to continue to improve in H2 22, in part, due to the inherent seasonality of the business, but also due to some catch up in demand. Guidance is for FY22 post-tax profit to be in line with the consensus estimate of £32.2m, as a result Zeus reduces its estimate by 2.5% to £32.2m. Previous guidance of £3.0m potential impac
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Last week, the UK government published the consultation paper on its Review of Electricity Market Arrangements (REMA). Any change potentially represents uncertainty in a market that has been wary of changes with a number of shares falling after early details of possible reforms were flagged in the press. We review the possible changes and conclude that while there is some risk, from what we can see at present the likely outcomes could be either minimal or beneficial for investors in clean energy
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Invinity has begun trading shares on the OTCQX Best Market in the USA. We see this as adding liquidity for North American investors and more generally increasing visibility for the company in key markets in North America.
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The US Inflation Reduction Act of 2022 now has a chance of passing the Senate next week as it is being voted under the Reconciliation procedure which allows bills related to the budget to pass on a simple majority rather than the 60-vote majority required to overcome a filibuster. If the act does find its way onto the statue books it will bring US$369bn in clean energy tax credits, grants and other incentives. Much is directed to protecting clean energy manufacturing in the USA, but it is a wide
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Rolls Royce published mixed figures. Profitability was particularly low, pushing the net result back into the red zone. However, FCF generation was a positive surprise despite the rise in inventory. It has finally found an agreement to sell ITP Aero and will use the resulting cash to repay its only floating interest rate debt.
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Oil posted the biggest weekly decline since early April on growing signs that a global economic slowdown is curbing demand. Prices are near the lowest level in six months.
West Texas Intermediate settled at $89 a barrel, ending the week nearly 10% lower. US gasoline consumption has dropped, stoking demand concerns, while low liquidity has added to volatility. Supplies from Libya also picked up, helping to shrink key oil futures time-spreads and ease the tightness in the market.
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