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Research: Industrials
The announcement of a €4.8m vehicle communications contract win for the Portuguese Army is in addition to the prospects indicated at the AGM on 11 September. It suggests that positive order book momentum is building as we approach the H118 period end. The shares have continued to perform well since the prelims in July, but remain on a relatively undemanding FY20e P/E of 12.5x.
Written by
Cohort |
Encouraging order development |
EID contract award |
Aerospace and defence |
4 October 2018 |
Share price performance
Business description
Analysts
Cohort is a research client of Edison Investment Research Limited |
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The announcement of a €4.8m vehicle communications contract win for the Portuguese Army is in addition to the prospects indicated at the AGM on 11 September. It suggests that positive order book momentum is building as we approach the H118 period end. The shares have continued to perform well since the prelims in July, but remain on a relatively undemanding FY20e P/E of 12.5x.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
04/17 |
112.7 |
14.5 |
26.6 |
7.1 |
15.6 |
1.7 |
04/18 |
111.8 |
15.5 |
29.4 |
8.2 |
14.1 |
2.0 |
04/19e |
118.4 |
16.0 |
31.2 |
9.2 |
13.3 |
2.2 |
04/20e |
124.8 |
17.0 |
33.2 |
10.1 |
12.5 |
2.4 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items, share-based payments and one-off tax credits.
Cohort’s Portuguese subsidiary, EID, has been awarded a €4.8m contract by the Portuguese Army to supply communication equipment for 139 VAMTEC 4x4 light armoured tactical vehicles. EID will be a subcontractor supplying the Spanish vehicle manufacturer URO Vehiculos Especiales, which won the competitive tender to supply the vehicles. Delivered over the next two years, the award is significant both in terms of EID’s annual sales of c £20m and order backlog, which started FY19 at £18.2m.
At the end of Q119 (31 July 2018) Cohort’s order book had increased by £2m to £104.5m, so the new contract is significant. In addition, management indicated that positive discussions with customers about important order opportunities continued, including: renewal and extension of export electronic warfare work at MASS, export orders for torpedo launch systems at SEA, a new export order for MASS's Thurbon database, further orders for submarine surveillance systems at MCL and a large order for vehicle intercoms for EID from a Middle East customer. Management also points to the continued search for appropriate M&A targets to augment growth.
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Research: Consumer
PPHE continues to please, with resilient H1 operating results complemented by first-time disclosure of EPRA reporting, which highlights its real estate business with EPRA NAV of £24.21 at June 2018, significantly ahead of the current share price. A fine record of value creation (21% CAGR in NAV over the seven years to end-2017, as newly presented) should underpin the company’s ability to leverage on its assets, in addition to reinvestment potential from £152m excess cash. H1 saw maintained like-for-like EBITDA against a “very strong” comparative in London, PPHE’s major market, and renovations in the Netherlands. Encouraging trading in its seasonally stronger H2 supports guidance that 2018 expectations are unchanged. The interim dividend is raised by 45%.