One of the best placed 'reopening' stocks
Although it may not feel like it for the 1.7m people who are unemployed - but despite the lockdowns UK employment prospects are steadily improving thanks to the country’s successful vaccine rollout. The only slight frustration is that this optimism hasn’t yet translated into a surge in recruitment activity, albeit we suspect a rehiring boom is only a matter of time, especially for STEM recruitment specialist Gattaca.Today the company said that Q2’21 NFI had climbed 2% sequentially vs Q1, which itself was 9% higher than Q4’20, and reporting H1’21 NFI of £21.1m (-34% vs £31.8m LY). Adjusted PBT was consistent with FY21 expectations (ED £750k) after benefitting from tight cost discipline & the faster realisation of ‘Improvement Plan’ savings. Net cash (pre IFRS15 & 17) closed Jan’21 at a healthy £22.9m, excluding deferred VAT and non-recourse debt.
Looking ahead, our FY21 & FY22 adjusted PBT forecasts have been left unchanged, with FYI NFI anticipated to climb +28% vs -20.8% in FY21 – although the exact timing of this inflexion point remains uncertain.
Despite recent share gains the stock at 100p still trades on modest FY22 multiples of 5.2x EV/EBIT and 7.6x PER, well below 12.1x & 20.2x for the peer group average. We retain our 140p/share valuation, and would expect an upwards re-rating as favourable operating leverage kicks in.
Adecco Group provides human resource services, including temporary staffing, permanent placement, outsourcing, consulting and outplacement. Co. has more than 5,500 branches in over 60 countries and territories. Co.'s Office and Industrial businesses offer a range of general staffing services, including temporary staffing, permanent placement, assessment, training and integrated human resources applications. In addition, Co. operates professional business lines, which include Adecco Finance & Legal, Adecco Engineering & Technical, Adecco Information Technology, Adecco Medical & Science, Adecco Sales, Marketing & Events and Adecco Human Capital Solutions.
Empresaria Group is an international specialist staffing group. As of Dec 31 2016, Co. operated in 19 countries across four geographic regions and across seven primary sectors. Co.'s business is segmented into four regions, U.K., Continental Europe, Asia Pacific and the Americas. Co.'s primary sectors include technical and industrial, information technology, digital and design, professional services, retail, executive search, healthcare, aviation services, and other. Co. has three main service lines, temporary and contract recruitment, permanent recruitment and offshore recruitment services.
Gattaca is an engineering and technology recruitment solutions company. Co. operates in the STEM markets (science, technology, engineering and maths), all sectors with skills shortages. Co. has three reporting segments, Engineering, Technology and International. Co.'s brands are Matchtech, an engineering recruitment specialist; Networkers, a technology recruitment specialist; Cappo, Provanis, Barclay Meade, a professional services brand, recruiting finance, procurement, sales and HR professionals., and Alderwood, which is involved in placing trainers and assessors with training providers throughout the U.K. and the Middle East.
ManpowerGroup provides a range of workforce solutions and services, which include recruitment and assessment, training and development, career management, outsourcing, and workforce consulting. The company's family of brands and offerings includes Manpower, Experis, Right Management, and ManpowerGroup Solutions. The company's portfolio of recruitment services includes permanent, temporary and contract recruitment of professionals, as well as administrative and industrial positions. All of these services are provided under its Manpower and Experis brands. The company provides services under its Experis brand, particularly in the areas of Information Technology, Engineering, and Finance.
Randstad is a global staffing and recruitment company, providing various solutions in the human resources (HR) services space. Co.'s services include regular temporary staffing and permanent placement of candidates. In addition, Co. provides several other HR solutions, such as Recruitment Process Outsourcing (RPO), Managed Services Programs (MSP), payroll services, and outplacement. Co. provides four distinct service concepts: Staffing, Inhouse Services, Professionals and HR Solutions.
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