£262.7m market cap

640p last close

Cohort is an AIM-listed defence and security company operating across six divisions: MASS (31% of FY20 sales), SEA (24%), MCL (11%), 80%-owned EID (14%), 81%-owned Chess Technologies (19%) and newly acquired ELAC SONAR.

Investment summary

Cohort’s defence and security orientation has proven relatively resilient during the pandemic. It delivered higher H121 operating profits on 10% lower revenues. There is a significant H221 weighting as management expects similar FY21 performance for the ongoing businesses to FY20. A £219m record order backlog provides 92% cover for FY21 consensus sales and the £25m 10-year follow-on contract foe SEA to manage and upgrade in-service sonar equipment for the MOD was announced in late March. ELAC SONAR will make its initial contribution in H221. Our estimates are maintained and the shares trade at a modest discount to UK defence peers.

Y/E Apr
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2019A 121.2 17.3 15.9 33.6 19.0 22.5
2020A 131.1 20.9 17.5 37.1 17.3 20.0
2021E 142.1 21.4 17.7 33.6 19.0 17.2
2022E 158.9 23.3 19.4 36.3 17.6 12.0
Industry outlook

Cohort is heavily influenced by activities in defence and security (90% of FY20 sales). These markets require highly differentiated technologies and services with high barriers to entry based on customer relationships, regulation and high-level security clearances. Defence is generally quite resilient in periods of significant economic disruption and the £4bn pa increase in the UK defence budget announced in November 2020 appears to mitigate concerns over imminent budget constraints.

Last updated on 05/05/2021
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Share price graph
Balance sheet
Forecast net debt (£m) 5
Forecast gearing ratio (%) 6
Price performance
Actual 4.1 2.9 13.3
Relative* (0.1) (4.8) (8.9)
52-week high/low 680.0p/520.0p
*% relative to local index
Key management
Nick Prest Chairman
Andrew Thomis CEO
Simon Walther FD

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