The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
"Barclays raises Relx price target to 3,450 (2,900) pence - 'equal weight'"
(18 January) "JPMorgan raises Qinetiq price target to 455 (from 440) pence - now rated 'overweight'."
(Sharecast News: 16 January 2024) - In an update for the third quarter, the defence and security firm said it delivered a good operational performance, with continued organic revenue growth and operating profit margin in line with its expectations. The order intake remained strong, it said, with year-to-date orders at around £1.35bn and revenue under contract for the full year improving to 95%, higher than this time last year.
Qinetiq said cash generation was very strong, as expected, with cash conversion "significantly above" 100% in the quarter. "We are now back in-line with our normal cash profile and on-track to deliver 90%+ cash conversion for the full year, as previously guided," it said. "Overall, the group is making good progress and we remain on-track to deliver in line with expectations for FY24."
Analyst expectations for the full year are for revenue of £1.87bn and operating profit of £210m.
Chief executive Steve Wadey said: "Our excellent order intake demonstrates the continuing demand for our high-value, cutting-edge services and products. Our operational performance in the third quarter underlines our confidence in delivering another year of good organic growth at stable margins with strong cash conversion. "Given the group's high cash generation and confidence in the long-term outlook, we are pleased to announce the launch of a £100m share buyback programme to increase returns to shareholders, whilst maintaining the ability to deliver our long-term growth strategy."
(Alliance News - 11 Dec 23) "Back in London, Qinetiq was the best FTSE 250-listed performer, up 3.5%. JPMorgan lifted the defence technology to 'overweight' from 'neutral'."
I'm puzzled too. I have been wondering about that rather negative piece in the Investors' Chronicle two weeks age responding to the company update:
Quote "However, as the 8 per cent post-results slide in its share price indicates, not everything went as well as it might. Operating profit on a statutory basis was 28 per cent lower, mainly due to the swing in value of a foreign exchange derivatives contract taken out last year to hedge against currency fluctuations while the Avantus deal was being ironed out. A year ago, Qinetiq recorded a gain of £42.9mn on the contract but this time it booked a £20.7mn loss.
"Of greater concern, though, was that revenue from the US was “slower than expected”, making up just 22 per cent of the total, compared with 15 per cent last year prior to the Avantus deal. It blamed this on the ongoing federal budget dispute and some awards being held up by competitors challenging the bidding process. A consortium in which it played a part also lost out on a contract to build optionally-manned fighting vehicles for the US Army. Despite this, the company argued that a “significant step-up in contract awards” would lead to stronger second half US growth.
"Cash generation was also disappointing, with Qinetiq’s underlying cash conversion ratio dropping to just 50 per cent, compared with 106 per cent over the course of last year. The company attributed this to “short-term timing effects” and said it should still meet its full-year target of 90 per cent.
"The key consideration for investors is whether these are short-term blips. On the cash issue, it shouldn’t take too long to find out and if the company is true to its word, the shares should re-rate. Broker Shore Capital envisages a 30 per cent upside to the shares based on an analysis of its returns and its growth potential. Given a price-to-earnings ratio of 12 – below both its peers and its five-year average – we also think they represent good value. Buy." Unquote.
Any other ideas?
Berenberg cuts Qinetiq price target to 440 (450) pence - 'buy'
Half-Year Results out next Thursday (16th).
Motley Fool included QinetiQ in a public review of three defence stocks today:
Short version: "...This £2bn company provides technology and services to both governments and commercial clients... The share price has risen 30% since Russia’s invasion of Ukraine, although it’s down around 4% this year.
This is despite a strong Q2, during which it improved its organic growth and profit margins. It also increased its order backlog, securing a record first-half order intake of approximately £950m.
Revenue growth has been solid, rising from £883 in 2018 to an expected £1.8bn this year (FY24). Net profit has been lumpy in that time though, which is a risk here. But it has still trended higher, with analysts forecasting £160m in bottom-line profit this year, around 3.8% higher than last year.
Meanwhile, the stock looks cheap on a P/E ratio of 12.8..."
Might stir some interest.
The calculation posted here last week indicated a gross income of just over £1 million per turbine per year. I'm unsure how much of that AR gets to keep and how much is shared with project partners.
Thank you. It will be most interesting to see if the 1A project achieves the income anticipated.
Assuming all four 1A turbines operate successfully and as anticipated, can anyone give an informed estimate as to the total value of electricity that will be produced over an average twenty-four hour period? And what percentage share of that value will be retained by Atlantis Resources?
Thank you Stroma. I have to wonder why this information has not been released to share-holders via a new RNS?
(From brokermandaniel.com - Posted 26 July 2011) continued... Strategic Natural resources Chief Executive (David Nel) reported in early June that the company strategy is; ” now well advanced converting our plans into realities”. And they expect this year will be “a year filled with enormous activity and delivery” which should “lead up to the successful shipment of our first vessel of coal.” Now that was back in June of this year so things will or should have moved on by now. They must be close to resolving the funding issue. There was a fly in the ointment here with a disputed loan which in the end cost the company about £1.3 million pounds to settle now even though it was a kick in the teeth at least it’s now settled. Which leaves the runway clear for Strategic to focus on their Elitheni mine asset which has already sold the first 2 million tonnes of coal in an agreement with the Trasteel Group.The off-take of the coal is over a two-year period and this 2 million tonnes actually represents approx’ 1% of their existing resource so you can imagine as to just how much coal there is at the Elithene mine. This is a major coal miner in the making subject to funding. I wouldn’t concern myself with the operating loss/debt as if as looks likely they get the funding then this will be wiped out with a stroke of the pen. There’s much more to them so get researching and stick them on a watch-list for news regarding their funding.
(From brokermandaniel.com - Posted 26 July 2011) Miner to Major Company in the Making. Take a good look at this company there’s an awful lot of interest beginning to grow. Particularly among Privateers who think that Strategic could become a multi-bagger over the next few months. Strategic Natural Resources PLC (“SNR”) was established on 5 October 2004 as a vehicle to develop, own and manage natural resource extraction enterprises in Southern Africa. As its first project, SNR acquired control of Elitheni Coal in the Eastern Cape some 200 miles north-east of Port Elizabeth. The principal assets of Elitheni are a new order mining right over 92 km2 as well as new order prospecting rights over an additional 1,700 km2 for coal which it holds in the Eastern Cape, South Africa. The company are a miner and at present the big question or anchor holding them back is funding. However they do have some mouth-watering assets (coal) that if managed,mined and funded correctly could see this company dramatically rise over the coming year. I’ve had literally several days of digging around asking various contacts where they see this company in 12 months. The vast majority all see the company sp significantly higher than were it currently sits but all temper their forecasts with the caveat of funding! We’ve had a couple of rns releases this week (as foretold) one was Director buys and the other was company share options.. If you look at the news in its entirety over the last few months it looks and feels as if the Board are quietly positioning themselves to reap the benefit from funding news which several sources think is imminent. They’ve also recruited very well over the last several months which should be seen as another pointer re’ the funding concerns expressed by potential institutions. (If their Board and management are experienced and competent then funding is easier to negotiate) Now there’s no doubt that they will get the funding in place the big question is what form this funding will take; ie institutional placement or general placement open to existing holders. My suspicion is that it will be a combination of the two.
Trifast Reduces FY Losses. [Digital Look] Industrial fastener and components group Trifast said it reduced full year losses by 75% as it outlined several board changes. The group posted a pre-tax loss of £2.8m in the year ended 31 March 2010 compared to a loss of just under £11m the year before. Revenue for the year fell to £85.94m from £104.9m previously. The group noted a, "recovering optimism coming through from customers and key TR sectors." Trading in Asia was buoyant in manufacturing and distribution, while its markets in UK, Europe and the US are starting to recover. Net debt was trimmed back to £4.68m from £8.40m in 2009. The group also announced a number of new board appointments, including Mark Belton as Finance Director. Seamus Murphy has been named director of operations, HR and IT and Glenda Roberts has been appointed group sales director. Trifast said it will focus on margin improvement, cost controls, working capital, debt reduction and generating cash. It expects to make further progress during the current year as it implements "Phase 2" of growth strategy. "We are confident that TR remains on target with its three-pronged strategy and stated objective to return the business back to stronger levels of profitability." No dividend payment has been recommended.
[16 June 2010] RNS Trifast Preliminary Results for the Year ended 31st March 2010 at http://www.trifast.com/ - "New three-phased strategy playing a key role in the TR recovery story". - "By the year-end and ahead of management expectations, all TR business units traded profitably whilst stocks were reduced by £3.8m". - "Sales daily run-rate continues to perform well and enquiry levels are higher than for many months. Global sales contracts secured beginning to come on stream and the focus on key sectors is driving further opportunities." - "Trading in Asia remains buoyant in both manufacturing and in distribution, whilst UK, Europe and the US are beginning to recover".