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Research: Industrials
The positive order intake news continues for Cohort. It has announced a further £3.2m contract for MASS to provide business analysis support to the UK’s MOD. In addition, the Portuguese subsidiary EID has won export contracts worth €11m for vehicle intercom systems for two existing customers. The EID contracts include successful acquisition of one of the five potential order opportunities previously indicated in the AGM update. Cohort continues to see improving overall group order inflow, which underpins the outlook for the businesses through FY19 as well as in the medium term. The shares have been performing well in a challenging stock market, and the current FY20e P/E of just 12.3x remains undemanding in our view.
Written by
Cohort |
Further order successes for MASS and EID |
New contract awards |
Aerospace & defence |
13 November 2018 |
Share price performance
Business description
Analysts
Cohort is a research client of Edison Investment Research Limited |
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The positive order intake news continues for Cohort. It has announced a further £3.2m contract for MASS to provide business analysis support to the UK’s MOD. In addition, the Portuguese subsidiary EID has won export contracts worth €11m for vehicle intercom systems for two existing customers. The EID contracts include successful acquisition of one of the five potential order opportunities previously indicated in the AGM update. Cohort continues to see improving overall group order inflow, which underpins the outlook for the businesses through FY19 as well as in the medium term. The shares have been performing well in a challenging stock market, and the current FY20e P/E of just 12.3x remains undemanding in our view.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
04/17 |
112.7 |
14.5 |
26.6 |
7.1 |
15.4 |
1.7 |
04/18 |
111.8 |
15.5 |
29.4 |
8.2 |
14.0 |
2.0 |
04/19e |
118.4 |
16.0 |
31.2 |
9.2 |
13.1 |
2.2 |
04/20e |
124.8 |
17.0 |
33.2 |
10.1 |
12.3 |
2.4 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items, share-based payments and one-off tax credits.
The order intake through the current financial year to date has remained very encouraging and continues to validate Cohort’s products and offering, as well as underpinning expectations. The contracts announced today will be delivered over 18 months (for MASS) and two years for the export contracts. These add to the near-term order cover and complement the longer-term contracts such as the recently announcement of preferred bidder status for a £50m MOD contract renewal that MASS has performed since 2000.
If Cohort successfully lands the other significant contract potentials previously indicated at the AGM, what is already looking like a good year for order inflow could become an excellent one. In turn, this should instil greater confidence in Cohort’s ability to negotiate the ongoing constraints of the UK defence budget environment.
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Disclaimer
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Disclaimer
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Research: Consumer
Evolva’s Q3 trading statement is mixed, but overall we believe it contains more positive than negative news. The announcement that Cargill and DSM are to form a new joint venture to produce fermentation-based stevia under the EverSweet brand is not a threat to Evolva’s position and indeed could potentially accelerate growth of the market that is still in its infancy. We note that revenue guidance is somewhat less bullish than at the H1 results and we therefore trim our forecasts slightly. We also update our forecasts for FX and overall our fair value remains unchanged at CHF0.58