Join our community of smart investors

Pennant’s recovery on track

A small-cap company has won a valuable contract to supply simulated training systems for the British Army’s new Apache AH-64E helicopter fleet
Pennant’s recovery on track
  • Named key supplier by Boeing in connection with the “Major Programme” 
  • Contract worth £9m in revenue across three years

Pennant (PEN:35p), an Aim-traded supplier of products and services that train and assist engineers in the defence and civilian sectors, has been named as a key supplier by Boeing in connection with the “Major Programme” the UK company had highlighted in early December.

Analysts at brokerage WH Ireland expect that the £9m contract will be spread over three years. Pennant will supply simulated training systems for the British Army’s new 50 Apache AH-64E helicopter fleet as part of Boeing’s contract with the UK’s Ministry of Defence. 

In a pre-close trading update the previous day, Pennant had revealed that £10m of its £22m contracted order book is scheduled for delivery in 2022, so the additional Boeing contract increases revenue visibility materially – WH Ireland forecast annual revenue of £17m and pre-tax profit of £0.6m in 2022, reversing a £0.6m expected loss in 2021. In addition, a software and analytical services contract with a new customer in the commercial aviation sector has now been signed off and will contribute to the 2022 result. It will contribute revenue of US$1.1m (£0.8m) in its first year. The group’s software division accounted for well over a third of Pennant’s revenue last year and is reaping the benefits of cross-selling opportunities across an enlarged client base.

The shares have started to make headway from the 30p level when I highlighted the potential for an earnings recovery (‘An undervalued micro-cap on the road to recovery’, 22 September 2021). If the contract momentum continues to build, as I expect it will, then expect earnings upgrades to follow.

Importantly, unrealised tax losses of £4.5m carried forward will benefit future taxable profits to accelerate the earnings recovery for the £12.5m market capitalisation company, while net debt of £3.6m is set to be slashed when a £2m cash milestone on a legacy contract is invoiced in the first half of this year. Buy.


■ Simon Thompson's latest book Successful Stock Picking Strategies and his previous book Stock Picking for Profit can be purchased online at, or by telephoning YPDBooks on 01904 431 213 to place an order. The books are being sold through no other source and are priced at £16.95 each plus postage and packaging of £3.25 [UK].

Promotion: Subject to stock availability, the books can be purchased for the promotional price of £10 each plus £3.25 postage and packaging, or £20 for both books plus £3.95 postage and packaging

They include case studies of Simon Thompson’s market beating Bargain Share Portfolio companies outlining the investment characteristics that made them successful investments. Simon also highlights many other investment approaches and stock screens he uses to identify small-cap companies with investment potential. Details of the content can be viewed on