The shares appear oversold
Gattaca is the UK's largest specialist engineering/tech recruitment agency. Its shares have fallen >70% (vs c. -25% sector) from their 52 week high of 285p - principally due to January’s profit warning. There is work to be done, but even so we believe the scale of the sell-off looks totally disproportionate to the issues involved (Re temporary disruption from a major IT system implementation, staff turnover/culture, etc).Following the recent appointment of Matthew Wragg as CEO - a highly capable & experienced industry professional with ‘sales’ running through his veins - the early signs of a successful turnaround are tentatively taking shape, with productivity levels inching up anecdotally MoM since January. Furthermore the company is “seeing encouraging trends across many of its sectors”.
We have pencilled in FY23 PBT of £2.5m on NFI of £49.1m with a 145p/share fair value, albeit these estimates are prudent, and we would ultimately hope to upgrade as key milestones are met. Similarly, we assume the FY22 dividend will be temporarily suspended, leaving net funds (pre IFRS16) of £5.0m as at Jul’22 (excluding £10.4m of non-recourse finance).
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.
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