AB Dynamics (LSE:ABDP) has completed its strategic review of VadoTech, its Chinese testing services business, and has agreed with its customer to terminate the existing contract and withdraw from the on-road vehicle testing market in China. The business will now be classified as a discontinued operation and is expected to reduce reported group revenue for FY2026 by approximately £4 million. Restated FY2025 figures show that VadoTech generated £10.5 million in revenue while reducing adjusted operating profit by around £1.0 million, reflecting the group’s strategy of focusing on higher-margin core operations.
The company said trading conditions became more challenging during the second half as geopolitical uncertainty, supply chain disruption linked to the Middle East and delays to automotive development programmes affected customer order timing. Although AB Dynamics continues to report a healthy sales pipeline, order conversion has slowed. As a result, the company now expects FY2026 revenue from continuing operations to be between £90 million and £95 million. Management is nevertheless targeting an adjusted operating margin of 20% through disciplined cost management, while its strong net cash position of £41.7 million provides financial flexibility to continue investing in product innovation and commercial expansion.
The company’s outlook remains supported by solid financial fundamentals, including strong profitability, low leverage and healthy cash generation, alongside expectations for improved order activity over the longer term. However, technical indicators remain weak, with the shares trading below key moving averages and negative momentum signals persisting. Valuation also remains relatively demanding, with a higher price-to-earnings multiple and a modest dividend yield limiting upside from a valuation perspective.
About AB Dynamics
AB Dynamics is a UK-based developer and manufacturer of advanced testing, simulation and measurement technologies for the global transport industry. Its products are used by leading automotive manufacturers, Tier 1 suppliers and engineering service providers to test, validate and improve vehicle safety systems, autonomous driving technologies and vehicle dynamics across international markets.
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