QinetiQ Group - Unique position

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.

QinetiQ Group - Progressing as expected

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.

QinetiQ Group - Investing for growth

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.

- Pre-close confounds the doubters

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

Trading as expected

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

Momentum building

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

Targeting acquisitions and contracts

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

LTPA provides visibility and expansion potential

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

De-risked with investment catalysts

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

Competitive evolution continues

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

Steady as she goes

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,

Q1 trading in-line, SDSR on the horizon

QinetiQ’s Q1 AGM trading update reiterated the tone of the full-year results with trading in line with expectations and a cautious outlook for FY16. While the Strategic Defence and Security Review (SDSR) provides some uncertainty, the government’s pledge to maintain 2% of GDP spending on defence improves the backdrop. With both divisions exhibiting positive signs, supported by in-year order cover (reiterated as at the full-year results), and with the full benefit of the share buyback to come, ou

Morning Note – 22 April 2024

Supreme (SUP LN) - Record performance, EBITDA ~doubled

Supreme’s FY24 trading update confirms a record performance in the 12 months to 31 March 2024. Organic revenue and profit growth across all four divisions has driven Group revenue +45% YOY to £225m, with FY24 adj. EBITDA almost doubling to ‘at least £38m’, driving record levels of cash generation. Supreme is actively exploring complementary M&A, supported by a debt free balance sheet. Trading on an undemanding FY25 PE of just 6.7x, with a 3.4% yield, we believe downside risks are more than price

Headlam Group - Strategy for growth in tougher market

Headlam Group has laid out an ambitious long-term revenue target of between £900m and £1bn, as it seeks to grow its share of the UK floor coverings distributor market. Despite a challenging backdrop due to the low level of residential housing transactions, management is seeking to expand each of its sales channels: Trade Counters, Larger Customers, Regional Distribution and Europe & Other. The FY23 results reflected the more challenging environment and the group trades at a discount to its long-

SP Angel Spec Sits: FY Trading Update (LTHM)

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

SP Angel Morning View: Copper prices hit $9,700/t as China smelts concentrates for zero charge Tc/Rc

Supreme+ (SUP, House Stock at 125p) - Supreme, Supreme!

LIBERUM: Ilika: CMD confirms operational progression

LIBERUM: Severfield: Erratum: Better EPS and cashflow, and buyback

LIBERUM: CEO Video: Matt Wragg, Gattaca plc:

VSA Morning Flow Test 19/04/24 (Quadrise)

Quadrise (QED LN) has provided an update on its Utah project with Valkor. Valkor’s partner (Heavy Sweet Oil LLC) has received funding and approval to commence drilling enabling production of 20-40bopd of heavy sweet oil providing QED with samples for production of test scale quantities of MSAR and bioMSAR; the company’s key fuel decarbonising emulsion fuel products. This should derisk the commercial scale ramp up. QED management has highlighted that Valkor has not yet raised the minimum of US$

Hybridan Small Cap Feast - 22 April 2024

22nd April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

AUCTUS ON FRIDAY - 19/04/2024

AUCTUS PUBLICATIONS ________________________________________ Tethys Oil (TETY SS)C; target price of SEK100 per share: Increasing further the size of the prize/Considering Algeria – The South Lahan area on Block 58 is estimated to hold 55-523 mmbl prospective resources (P90-P10 case) with a mean case of 251.8 mmbbl prospective resources across six prospects in the Ara Carbonate. Combined with the previously disclosed prospective resources of the Fahd area in the north-eastern part of Block 58, Te

LIBERUM: Gattaca: Resilient contract performance, perm tough

Morning Note – 26 March 2024