Orders pick up at Judges Scientific

Order intake is the main driver of growth at Judges Scientific (JDG), the Aim-traded scientific instruments specialist. By this measure, the group has been making good progress – with intake up 7 per cent in the year to 31 December. 

However, recovery from the pandemic and related supply shocks has not been uniform across Judges’ portfolio. Management noted in the results that a few of its smaller holdings “still found it challenging to restore order intake to 2019 levels”. 

The company’s ‘buy and build’ structure – which involves acquiring and developing scientific instrument businesses – lends itself to these sorts of variations. It’s therefore encouraging that it managed to maintain its organic Ebita margin before central costs at 25 per cent last year. Adjusted profit before tax also grew to nearly £32mn from just over £28mn, although the statutory figure fell due to the amortisation of acquired intangible assets. 

One of the group’s most significant purchases in recent years was Geotek, a developer of geological and oceanographic equipment, which was completed in FY2022. Judges’ performance in the current year will be determined in part by whether Geotek signs an important contract for the collection of rock samples. 

“Management has previously stated that it can meet consensus market expectations for [2024] without a coring contract, so this will provide upside to forecasts, should it occur,” Liberum analysts predicted. 

Ultimately, the group’s fortunes will be determined by global demand for scientific research, which is bound to increase in the long run. But Judges notes that the “competing goals” of stimulating economic recovery and reducing government debt may impact research funding in the short term. With the shares trading on a fairly pricey 28 times FY2024 consensus earnings, we’re inclined to hold a little longer. Hold.

Last IC view: Hold, 9,160p, 20 September 2023