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Qinetiq, a defense technology company, has been performing well recently.
Since Russia’s invasion of Ukraine in February of last year, Qinetiq’s share price has increased by 26%. This growth is due to higher demand for its services, resulting in a 20% increase in revenue and a 40% increase in operating profit for the year ending March 31.
In the first quarter of the current financial year, the company received numerous new orders, increasing contracted revenue for this year by £200mn to £1.3bn.
CEO Steve Wadey emphasized the continued importance of defense and security in the global security landscape.
Last week, Wadey sold some of his shares in the company, earning more than £1mn. This sale was disclosed after the market closed on Thursday, and on Friday, the company’s shares dropped by almost 7% to close at 322p per share. This extended a recent decline, with shares down 13% over the past three months.
At their current price, Qinetiq shares have a price/earnings ratio of just over 11, below their five-year average and at a discount of over a third compared to peer group valuations.
Based on market expectations for growth, the shares appear undervalued, with a consensus forecast predicting an operating profit of over £208mn for this year, a 21% year-on-year increase.
Qinetiq’s price/earnings growth (PEG) ratio, which measures the amount investors are paying for expected growth, is 0.9. A PEG ratio below 1 suggests an undervalued share.
The sale of shares caused concern among some investors and followed an annual meeting where nearly a quarter of shareholders voted against the reappointment of chair Neil Johnson.
Qinetiq stated that it would address concerns raised by shareholders who voted against Johnson’s reappointment but that the directors unanimously supported his re-election.
New Landsec Chair Invests
Sir Ian Cheshire, the recently appointed chair of Land Securities, purchased £100,000 worth of shares in July, becoming the first director to buy into the FTSE 100 real estate investment trust (Reit) in over a year.
Cheshire bought 14,840 shares at £6.69 each, marking the first insider acquisition at the Reit since chief executive Mark Allan purchased shares in July of the previous year.
Cheshire’s purchase followed lower than expected inflation data, which boosted Landsec and other FTSE 100 property stocks. Some investors interpreted this as a sign that the interest rate hikes that have negatively affected the property sector may soon come to an end. However, economists are divided on whether lower inflation will lead to the Bank of England concluding its rate-hiking cycle.
Landsec has been impacted by the property downturn, resulting in a pre-tax loss of £622mn for the year ending March 31. The value of its portfolio declined by 7.7%. The company’s shares currently trade at a significant discount to net asset value.
The company’s leisure and City office assets experienced the greatest declines in value, at 17.7% and 15.4% respectively. Other assets performed better, with a 1.3% value increase for its West End retail assets and only a 3% value decrease for its hotel assets.
Overall, net rental income increased by 10%, attributed to higher occupancy and cost management.
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