RE: Name change8 Sep 2022 08:59
Introduction to House Broker note this morning:
2022 interims - FY 23/24 forecasts introduced.
Interim results reflected the different scheduling of challenge studies during the period. Revenues declined 18% to £18.0m, but despite this, adjusted EBITDA increased 10% to £2.3m with margins up 330bps to 12.7%; illustrating the sustainably profitable nature of the business. With an order backlog at 1 September standing at c.£80m and a very strong start to H2 (£9m revenues and £4.1m of cash in July and August), the company maintains its FY guidance for revenues and other income of c.£50m for FY 2022. We introduce FY 2023 forecasts, which calls for 10% growth in revenues to £54m with EBITDA rising 20%, to £8.4m, given the operating leverage of the business. Based on the run rate of contract wins, expansion of services and new challenge models, we forecast revenue and EBITDA growth of 9% and 15% in 2024.
We maintain our 44p target price, based on a sum of the parts valuation, with the core business valued at 35p (based on 4.4x 2022 EV/Sales).