Directors’ Deals: Qinetiq chief secures £1mn from share sale

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Defence technology company Qinetiq has had a good run until very recently.

Since Russia’s invasion of Ukraine in February last year, the company’s share price has increased by 26 per cent as greater demand for its services led to revenue rising by a fifth and operating profit by 40 per cent in the year to March 31.

And in the first quarter of its current financial year, the company reported a raft of new orders, which increased the amount of contracted revenue for this year by £200mn to £1.3bn.

Chief executive Steve Wadey told investors that the “global security situation continues to highlight the importance of defence and security”.

Wadey, who has been chief executive for eight years, secured more than £1mn last week by selling some of his shares in the company.

The sale was revealed after Thursday’s market close and on Friday the company’s shares fell by almost 7 per cent, closing at 322p a share. This extended a surprisingly poor recent run of form, with the shares down 13 per cent over the past three months.

At their current price, they trade at just over 11 times forecast earnings, below their five-year average and at a discount of more than a third to peer group valuations, according to FactSet.

If, as the company indicated it would in a recent trading update, it meets the market’s expectations on growth, then the shares look cheap. The current consensus forecast is for the company to make an operating profit of over £208mn this year, a 21 per cent year-on-year increase.

Its price/earnings growth (PEG) ratio, which is a way of identifying how much an investor is paying for expected growth, stands at 0.9. As a general rule, a PEG ratio below 1 is an indication that a share is undervalued.

The share sale clearly spooked some investors, though, and followed an annual meeting at which nearly a quarter of shareholders voted against the reappointment of chair Neil Johnson.

Qinetiq said its board would engage with shareholders who voted against Johnson’s reappointment to address concerns, but that directors “unanimously” supported his re-election.

New Landsec chair buys in

Land Securities’ newly appointed chair snapped up £100,000 in shares at the end of July, becoming the first director to buy into the FTSE 100 real estate investment trust (Reit) in over a year. 

Sir Ian Cheshire, who took the helm in May this year after Cressida Hogg’s departure, bought 14,840 shares at £6.69 each in the first insider acquisition at the Reit since chief executive Mark Allan bought 14,672 shares at £6.78 each last July.

Cheshire’s purchase comes after lower than expected inflation data last month gave Landsec and other FTSE 100 property stocks a boost, with some investors taking it as a sign that the interest rate hikes that have battered the property sector over the last year could soon end. However, economists remain split on whether lower inflation necessarily means the Bank of England will soon be done with its rate-hiking cycle.

The property downturn has been bruising for Landsec’s financial performance and share price. In its results for the year to March 31, it swung to a £622mn pre-tax loss thanks to a 7.7 per cent slump in the value of its portfolio. The shares currently trade at a steep discount to net asset value.

Its leisure and City office assets took the hardest valuation hits at 17.7 and 15.4 per cent, respectively. Other assets performed better, though. Its West End retail assets enjoyed a 1.3 per cent value bump thanks to an uptick in rental activity in Victoria, and its hotel assets only recorded a 3 per cent value drop.

Across the whole of the portfolio, net rental income, which measures the rental income from the portfolio less the cost of running the buildings but before valuation changes, rose by 10 per cent, which Landsec pinned on “increased occupancy and our focus on costs”.