Cohort

LN: CHRT

£275.3m market cap

672p last close

Cohort is an AIM-listed defence and security company operating across five divisions: MASS (32% of FY19 sales), SEA (32%), MCL (18%), the 80%-owned Portuguese business EID (9%) and the recently acquired 81%-owned Chess Technologies based in the UK (c five months 9%).

Investment summary

Cohort has delivered a strong H120, with healthy like-for-like growth in revenues, and adjusted operating profit augmented by the initial first half contribution from Chess. With a record period-end order book of £207m, prospects remain bright and management expects to meet market expectations for FY20. The strong balance sheet supports the agile growth strategy and is facilitating the proposed €11.3m acquisition of ELAC Nautik from Wärtsilä Corporation. We estimate it should enhance EPS by around 7% in its first full year following completion.

Y/E Apr
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2018A 110.5 16.3 15.1 29.1 23.1 16.9
2019A 121.2 17.3 15.9 33.6 20.0 23.7
2020E 145.7 22.0 18.6 35.7 18.8 30.1
2021E 153.9 23.3 19.9 39.2 17.1 10.0
Industry outlook

Cohort is heavily influenced by activities in defence and security (88% of FY19 sales). These markets require highly differentiated technologies and services with high barriers to entry based on customer relationships, regulation and high-level security clearances. The UK government’s commitment to spend at least 2% of GDP on defence provides greater confidence, as does the parliamentary approval for the replacement of Trident.

Last updated on 12/02/2020
Sector
Industrials
Share price graph
Balance sheet
Forecast net debt (£m) 6.8
Forecast gearing ratio (%) 8
Price performance
%
1m
3m
12m
Actual (7.3) 22.0 81.4
Relative* (5.6) 19.0 71.9
52-week high/low 729.0p/354.0p
*% relative to local index
Key management
Nick Prest Chairman
Andrew Thomis CEO
Simon Walther FD

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