Rome was not built in a day. And like most good things, Gattaca’s transition from UK engineering staffer to international recruitment specialist of hard-to-find STEM candidates (Science, Technology, Engineering and Mathematics) is taking slightly longer than anticipated. Not because of any strategic or execution misstep, but largely because of more challenging conditions, which have impacted Net Fee Income (NFI, see below) over the past 3 years.
First emanating in permanent placements (25% NFI), then shifting to IT/Telecoms and more recently infiltrating the UK (68% NFI), after the surprise BREXIT and general election votes. The latter in particular was unsettling for corporate and candidate confidence – a recurrent theme expressed by many others in the sector
However, like ‘Joseph and his amazing technicolour dream-coat’, this ‘demand drought’ will eventually break. And when it does, Gattaca is in our view much better placed to ‘make hay’, underpinned by its wider global footprint, scalable business model and focus on the STEM verticals.
Indeed, in 2016 research by Engineering UK predicted an extra 1.8m engineers and technically qualified staff would be required by 2025, with a 20,000 pa shortfall in the number of students being educated in Britain. Structurally too, investment should accelerate both overseas (eg Trump’s US Infrastructure Bill) and domestically (eg Heathrow, Hinkley Point, Crossrail 2, HS2, smart cities) - augmented by continued spend in engineering, technology (eg Cyber security, IoT, Cloud, 5G, autonomous vehicles) and the adoption of IT/Telecoms within Automotive, Aerospace, Defence, Energy and Maritime.
Consequently, to us this is a time to be patient, ride out any temporary headwinds, and bank the generous 7.5% dividend yield.