EKF is now showing clear evidence that the increased focus on core products is having a beneficial impact on gross margins, earnings growth and cash generation, building on the initial positive signs from Q1. H1 Adj EBITDA is expected to be at least 20% up YoY, backed up by strong cash flows, with £5.1m generated in the period. This improvement is expected to be sustained into H2 and, as a result, management remains confident in the full year outlook. We make no material changes to our forecasts at this stage and look forward to a further update at the Interims on 17th September. The shares remain good value on <11x FY24 EBITDA falling to <9x, with a 6% FCF yield. We stay at Buy, with an increased TP of 39p.
