IOMINVESTCOM
17 Jan 2018
Re: Carillion Fallout? Statement re: share price movementGattaca plc ("Gattaca" or the "Group"
, the specialist Engineering and Technology (IT & Telecoms) recruitment solutions business, notes the recent share price fall.Gattaca has historically provided recruitment solutions to Carillion plc and its subsidiaries, primarily in the public sector arena. Whilst Gattaca has outstanding debts from the Carillion group, the vast majority of these are insured by a leading credit insurer and, at this time, we estimate our uninsured balance sheet exposure to be less than GBP100,000. The impact of Carillion's liquidation on our balance sheet will therefore be minimal.Our annual Net Fee Income from the Carillion group of companies is in the order of GBP0.5m. Gattaca continues to support the delivery of important public services and management is actively engaging with the relevant Carillion counterparties to ascertain how we can continue to support the related underlying projects which would also maintain this income, whilst ensuring that we will be paid for such services.Gattaca's Trading Update for the six months ended 31(st) January will be released 8th February 2018.
MrMeerkat
16 Jan 2018
Carillion Fallout? I am guessing that the thumping drop in SP is part of the fallout from Carillion’s collapse. In the absence of any announcements, does anyone know how exposed GATC is?I can understand a short-term hit if Carillion is a debtor, but would expect long-term that the demand for staff to undertake the work previously contracted by Carillion will largely continue e.g. Crossrail, HS2 etc. This could therefore be a good buying opportunityMM
IOMINVESTCOM
09 Nov 2017
Re: Paul Scott's view Gattaca (LON:GATC)Share price: 309p (down 0.3% today)No. shares: 31.6mMarket cap: £97.6m(at the time of writing, I hold a long position in this share)Preliminary results - for the year ended 31 Jul 2017. This company is;... the specialist Engineering and Technology (IT & Telecoms) recruitment solutions businessUnderlying diluted EPS has come in at 34.3p, which seems to be slightly ahead of 33.8p broker consensus. Although I'm not sure whether the broker consensus figure is basic, or diluted (which makes 1.0p difference to EPS). This is a PER of 9.0Note that EPS is 22% down on last year, so things are not going particularly well.Divis - this is the main reason to hold this share. Pleasingly, the generous payout is maintained, at 17.0p final, giving 23.0p for the full year - a yield of 7.4% . The fact that the divis are static, not increasing, suggests that the company might be struggling a little to maintain the payout - increasing the risk that it might be cut in future, if trading deteriorates further.Net debt has risen from £25.0m a year ago, to £40.3m. This looks a bit too high to me. Although with recruitment businesses debt is par for the course - to fund the big receivables book (debtors). In this case debtors is huge, at £115.0m, so actually having net debt of £40.3m is fine in that context.Balance sheet overall is fine.NTAV is £32.9m.Working capital - the current ratio of 1.85 looks very healthy, although note that there are also £26.0m in non-current liabilities. So if we move them into current liabilities, then the current ratio including all liabilities would be a still-healthy 1.32 .Therefore there are absolutely no worries with this balance sheet, or the level of debt. I saw some commentary a while back arguing that the company was dangerously over-geared. That was wrong, because the writer had not looked at the balance sheet as a whole.Outlook - light on specifics, but sounds generally positive;We will continue to position the Group to maximise growth opportunities both in the UK and internationally. We believe the investments we have made during the year, will deliver good returns in 2018 and beyond. We are now well placed strategically to take advantage of the increasing convergence between the engineering, IT and telecoms skill sets, and to grasp the opportunities presented by infrastructure investment commitments around the world, particularly those made by the UK and US Governments.While we continue to monitor uncertainty in the wider economy, we will invest selectively in strengthening the business to support our medium and longer-term performance.They've been saying that kind of stuff for a while, and it hasn't paid off yet.My opinion - whether you like this share really depends on your macro view. Personally I see bumpy, but not catastrophic times ahead. We'll muddle through with Brexit, and a wobbly Government, probably.Therefore, for me, I'm happy to hold for the generous divis. Although if the economy does go into a proper recession, then I'd want to exit from this probably.[link]
IOMINVESTCOM
03 Aug 2017
Paul Scott's view Valuation - Stockopedia shows 34.7p as the analysts consensus for EPS. If we knock that back to say 34p, which I would say is broadly in line, then at 277p per share, the PER is 8.1 - in the bargain basement. Mind you, that doesn't look quite so cheap when you adjust for net debt.Dividends are extremely generous, with this share yielding about 8%. A similar yield to Next. Usually an 8% yield is the market telling us that it thinks the divis are unsustainable at that level. However, with both Next and Gattaca, I reckon that could be wrong. Both look able to continue paying out at that level. Providing trading doesn't deteriorate, anyway.My opinion - a somewhat lacklustre trading update, which is reflected in a depressed share price.I must admit to be close to losing patience with this share. However, on balance I'll probably continue to hold for the excellent divis. Plus I think this is a fundamentally sound company. There could also, at some point, be consolidation in the sector, who knows?Hopefully the company can improve performance in future. Big UK infrastructure projects have been flagged by the company again today as providing potential upside.[link]
marktime1231
03 Aug 2017
In line with whose expectations When the board says its performance is in line with market expectations but the sp slumps 10%, then something is wrong. Clearly the market was expecting better than a 4% decline in fee income, even though the board are trying hard to make it sound like there was no surprise.Personally I was hoping for underlying performance improvement as the job market seems healthy.At least there was no more self-inflicted bad news, or have I missed something other than heavier borrowing between the lines?We will have to hold and wait until 9 Nov for the actual numbers to make sense of this, and hope for news of another healthy dividend to restore the sp, because as you say there seems to have been an over-reaction to the trading update.
Krayl
03 Aug 2017
Re: Update today I agree - reaction seems to be overdone.
Blanketstacker
03 Aug 2017
Update today "Broadly in line".... which means a slight miss!!! This does not warrant the current 11% fall. Being wary of the large spread, there is still value here
ER = 8Price to book = 1.2Yield = 8%, covered x1.5Net fee income has seen a SLIGHT decline, and they are still whinging about political uncertainty, but the company remains very profitable, with limited debt and experienced management. This should be priced at c350.
marktime1231
24 Apr 2017
UK job market news from someone called CV Library:"The UK job market sees positive growth over first quarter of the year, with total job applications, vacancies and average salaries rising."The data I think distills into a 15% increase in advertised vacancies and a 3% increase in candidate applications for them, year-on-year. Biggest uplifts in telecoms technical and manufacturing.In my simple mind that says that there should be increasing upward pressure on salaries and good times for firms which place staff in these industries, never mind Brexit or elections.So about time we had some good news from GATC about how it is doing in the marketplace rather than negative reports about how it is mis-managing its own internal issues.
equity_dev
19 Apr 2017
Webinar with management If you would like to hear management present the interim results for Gattaca we will be hosting a webinar on Friday 21st of April at 1.15pm. The registration link is: [link] webinar will be a 30 minute presentation followed by q&a. If you have any questions you would like asked please send them to [email protected]
casabanker
13 Apr 2017
Re: Paul Scott's view Good afternoon, IOM,Paul Scott is quite right in his opinion and attitude to his investment in GATC. Opinions help make a market and my opinion based on the experience of MTEC and now GATC is not positive anymore. I hope the sp does recover but, I am sure Paul would agree, that it is facing a headwind. The report by GATC today is a u-turn from the last information from the Company. Confidence is undermimed and the dividend must be under threat making the share more risky than previously. Averaging down can be a good way to turn an investment around but you are always in danger of catching a falling knife.Good luck, Casa.
IOMINVESTCOM
13 Apr 2017
Paul Scott's view My opinion (Paul) – obviously this is a disappointing announcement, but it’s not a disaster.Management credibility has taken a knock though – I’ll definitely be more sceptical when reading future updates from this company.I like the business model here though. This is a focussed staffing group, specialising in engineers & technology sectors – both good growth areas.I’ve no idea what the share price is likely to do in the short term, as that depends on the vagaries of the market. If an Institution decides to start dumping in the (illiquid) market, then the price could get trashed, who knows? So far though, today’s muted share price fall of about 10% suggests that existing holders have not been particularly spooked by this fairly mild profit warning.Personally I’m happy to hold, and watch to see what the price does. If anyone trashes the share price with clumsy selling, then I’d pick up some more. It’s a decent, cash generative company, paying big divis, so that seems quite attractive to me.[link]
claude reins
13 Apr 2017
Re: How disappointing Sold out too. Bought into Empresaria. Something I should have done some time ago. I would anticipate another warning in the not too distant future.
casabanker
13 Apr 2017
Re: How disappointing Hello marktime,I couldn't agree more. When it morphed into Gattaca from Matchtec and became a bigger organisation with interests in Europe, I thought it would do well. So I was persuaded to invest again and end up disappointed again. I have sold out this morning. Profit warnings rarely come in as single events so I am expecting more to follow. I am not sticking around when there are much safer "sleep at night" stocks, funds and trusts available. I wonder what will happen to the dividend? Will GATC be able to out perform to re-establish the confidence lost?Good luck to all here. Casa.
marktime1231
13 Apr 2017
How disappointing to have such a negative forecast update, especially considering that other recruiters have been buoyant recently. Why aren't we enjoying the same uptick from employment demand and the return of positive wage/inflation pressures?The release reads like it is mis-management - cost overruns and delays - rather than "challenging market conditions" related to Brexit which will mean a 10-15% underperformance this year. So much for my view that this is a company with potential and much further to go, what a sorry bunch.
casabanker
28 Feb 2017
Re: for the dividends marktime," I think there is (much) more value in this business, another 50p at least."Yes, you would think so especially with such a low PER. Even if you double the PER to around 15, GATC would still not be too expensive when compared with FTSE market averages. So 600 should be a possible share price. The trouble is that staffing agencies are in a very sensitive cyclical market. There is also keen competition from other agencies. Then there is the threat of the growing use of online agencies.Having said that, I have only reduced my holding so still have some skin in the game. The uncertainty over leaving the single market is weighing heavily on GATC imo and it is not until Article 50 is signed that we will see the effects. Give it six months at least before any meaningful effects can be measured. I suspect it will be a hard Brexit so there will some impact on the UK economy but I question the much claimed severity. Any bad trading figures will put the gbp under pressure. We already know how the effects of a weak pound show up as it has fallen 20% against the dollar and at least 10% against the Euro already. Imports should level out or fall and exports should rise. A hard Brexit will possibly result in the raising of trade barriers by the EU. Leaving aside agricultural machinery and the car industry, tarriff rates will be 2% or less. The car industry has a barrier of around 8% but the UK imports many more cars than it sells to the EU so a tit for tat tarriff increase will be self defeating for the EU. To sum up, if the UK can avoid a recession and keep interest rates lowish, there is no reason to think that GATC could not enjoy a reasonable economic climate. This is only my take on the short term position of GATC and is no way of a recommendation to invest.Casa.
