Good morning, it's Jack & Paul here with the SCVR for Wednesday.

Jack's section:

Gattaca (LON:GATC) - mixed update from cheaply valued STEM recruiter

Marlowe (LON:MRL) - ambitious growth targets laid out by this provider of regulatory compliance and risk management services

Paul's Section:

Transense Technologies (LON:TRT) - Review of interim results


Jack's section

Gattaca (LON:GATC)

Share price: 96p (-3%)

Shares in issue: 32,290,422

Market cap: £31m

Gattaca (LON:GATC) provides recruitment solutions within engineering and technology. Matchtech is one of the UK’s leading recruitment specialists, with market share estimated at around 5%.

This is a tricky, cyclical sector where it can be hard to build a durable competitive advantage. As such, operating volatility and low relative valuation multiples might be expected.

Gattaca’s international footprint provides some resilience but there have been problem acquisitions and questionable uses of capital in the past, so ongoing value-added capital deployment is a concern.

That said, trading at just 0.6x free cash flow, Gattaca’s valuation really is striking.

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No surprise to see that of the two Guru Screens it qualifies for, one is called Free Cash Flow Cows! Incidentally, both of the screens are Bargain strategies.

Trading update for the six months ended 31 January 2021

Net Fee Income ("NFI") to come in at £21.1m (H1 20 restated: £31.8m), primarily reflecting the market impact of the COVID-19 pandemic. Net cash before IFRS16 adjustments of £22.9m (July 2020: £27.3m).

Against a market cap of £32m, these are considerable numbers.

Improving activity levels through Q1 and UK NFI in Q2 was 2% higher than Q1, despite the return of tiered COVID-19 restrictions and extended national lockdowns.

NFI recovery for FY21 is likely to be at a slower rate than previously forecast. However, cost cutting and underlying improvements in the business should neutralise this and Gattaca expects full year underlying PBT to be in line with market expectations.

The ‘slower than expected’ line might be the market’s takeaway, given that sentiment on recruitment stocks has been quite poor.

Gattaca will announce its interim results for the six months ended 31 January 2021 on 31 March 2021.

Conclusion

This isn’t the type of company I tend to look at, but everything has its price and Gattaca does at first glance look…

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