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21st Century Technology – Contract Win share price rise, but what of margins & the balance sheet?

By Steve Moore | Monday 7 August 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

The largest percentage share price riser in London currently today is transport technology company 21st Century (C21). This is on the back of a “Contract Win” announcement…

The company “is pleased to announce a 3-year bus systems and services contract with Abellio… 21st Century will supply and install CCTV and associated communication technology on all new Abellio buses and provide technical support services to Abellio's existing fleet of approximately 900 buses operating in and around London”.

It is noted “the value of the contract is expected to be approximately £2.5 million” - this comparing to 21st Century's 2016 results having showed a loss of £2.3 million on revenue of £11.6 million.

This raises the question of margins, whilst it is also admitted the new contract value is “depending upon the actual number of buses manufactured over the period”.

The prior results also raised balance sheet concerns – and I look to see delivery on contracts alleviating such concerns before reconsidering my caution here. In this context, I’ll review the (due by the end of next month) half-year results with particular interest but for now continue to avoid.

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