The news that in the last few weeks Made Tech Group (LON:MTEC) has been awarded a massive £27m of new contracts by the Government, emphasises its potential to create sizeable profits in the coming year.
The £40m capitalised group is a specialist provider of digital, data and technology services to the UK public sector, enabling central government, healthcare and local government organisations to digitally transform.
The new contract wins are with the DVLA for £14m, the Department for Levelling Up, Housing and Communities for £8m and finally with the Cabinet Office for £5m.
Interim results due in next few weeks
Ahead of announcing its interims on Thursday 23 February the group issued a Trading Update declaring a strong first-half performance for the six months to end November 2022.
Group revenue was up 76% at £20.6m (£11.7m) while adjusted EBITDA was £0.5m (£1.2m), due to delayed bid submissions and ongoing project work.
The group had a net cash position of £9m, while its contracted order backlog at the period end was 53% up at a record £47.8m (£31.3m).
Going forward the group’s Board has confidence in its growth prospects, having right-sized its headcount, having reduced contractor numbers by 10% and improved cost controls.
CEO Rory MacDonald stated that:
“We are delighted to have delivered another period of strong growth. It is pleasing to note that our contract sizes continue to grow as we become more established in the market.
These wins, together with the new Home Office contract announced in November 2022, demonstrate Made Tech’s ability to deliver digital technology successfully, and highlight the strength of our reputation in this growing market.
As a result, the Group remains on track to meet market expectations for the full year and deliver value to shareholders over the long term.”
Analyst Opinion – the most important indicators are flashing green
Analysts at Singer Capital Markets rate the shares as a Buy, looking for 76p a share.
Their estimates for the current year to end May are for £43.0m (£29.3m) revenues, with adjusted pre-tax profits rising to £3.4m (£2.3m), generating 3.4p (2.3p) per share of earnings.
For the next year they go for £50.0m sales, £4.1m profits and 2.6p earnings.
Conclusion – 40p for 2023 an easy objective
With its shares now trading around the 27p price level they are offering attractive upside, with 40p being an easy 2023 objective.