Totally PLC (LON: TLY)  

Totally PLC is an FTSE AIM All-Share index listed leading healthcare service provider in the UK and Ireland. Moreover, it works in partnership with the NHS (“National Health Service) and other partners to deliver healthcare services through its divisions of Urgent Care, Planned Care, and Insourcing. The Urgent Care division contributes more than 85% of the revenue.

(Source: Company Presentation)

Recent trend of dividend payments

TLY had declared an interim dividend of 0.50 pence per share attributable for H1 FY22 driven by robust bottom-line profitability achieved during the period. In comparison, the Company had managed to pay an interim dividend of 0.25 pence per share for an equivalent period of the prior year.

Growth Prospects

• Contracts Extension: The Company had recently announced several contract extensions related to the Integrated Urgent Care services. Moreover, the contracts were valued at approximately £22 million and expected to remain valid for periods of between 6 and 12 months.
• Substantial Operational progress: TLY had managed to treat approximately one million patients during H1 FY22.
• Significant Recovery in Planned Care Division: The Planned Care division dealt with the delivery of physiotherapy services in clinics, health centres and prisons across England. The division got rebounded to pre-pandemic levels with the total mobilisation of the new contract for Community Dermatology services for Manchester and Trafford CCGs,
  

Key Risks

• Compliance Risk: The Company operates in a highly regulated market, and any non-compliance with rules and laws could lead to penalties and loss of reputation.
• Potential delay in drug launches: Any delay in rolling out treatments could lead to a loss in revenue and market share to competitors.
• Covid-19 Pandemic: The new variant of the Covid-19 pandemic, Omicron, had caused a significant decline in the UK Equities.
• UK GDP: The UK economy witnessed a slowdown as the GDP grew quarter-on-quarter by around 1.3% during Q3 FY21, which remained merely lower-than-expected growth of around 1.50%.
• Rise in Interest Rates: New Zealand came up with a second interest rate hike in the last two months. Moreover, rising inflation worldwide had put pressure on several Central Banks as they struggled to curb it.
  

Now, we will analyse the Key Fundamental Statistics & Shareholding Pattern of Totally PLC.

 Sneller (Richard) is the most significant shareholder as it holds nearly 20.27 million shares as of 30 September 2021.          

H1 FY22 Financial & Operational Highlights (for the six months ended 30 September 2021, as of 15 November 2021)

(Source: Company Results)

• Decent Revenue Growth: The Company posted decent revenue growth of around 14% in H1 FY22, where revenues for the period ended 30 September 2021 was £61.6 million compared to £54.1 million in H1 FY21. 
• Strong Profitability: The profit before tax had witnessed an increase from £0.06 million during H1 FY21 to £0.92 million for H1 FY22.
• Increase in Net Cash Balance: TLY had increased the cash balance to £18.3 million as of 30 September 2021, up from £14.8 million as of 31 March 2021.
  

Financial Ratios (H1 FY22)

Share Price Performance Analysis

(Source: Refinitiv; Analysis done by Kalkine Group)

On 02 December 2021, at 08:55 AM GMT, TLY’s shares were trading at GBX 33.90, up by around 2.73% from the previous day closing price. Stock 52-week High and Low were 44.50 and GBX 18.80, respectively.

From a technical perspective, the stock price is hovering above 20-days exponential moving average of GBX 33.30, indicating an upside potential in the stock price.

Over the last one year, TLY’s stock price has delivered a positive return of ~69.50%, and it has outperformed the FTSE All-Share Medical Equipment & Services index (benchmark sector) with a return of negative 7.13% and FTSE AIM All-Share index (benchmark index) with a return of approximately 12.08%. 

Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative)

Business Outlook

The Company’s business confidence remained elevated during H1 FY22 as it had shown a nearly 100% jump in the interim dividend attributable for H1 FY22. TLY remained committed to accelerating on the “buy and build” strategy that was implemented when the current management team got assembled in the past. Meanwhile, it remained in process regarding several bolt-on businesses to strengthen and explore further earnings enhancing opportunities. However, the stock price may undergo sizeable corrections because of the penny nature and ongoing investors’ worries regarding the Omicron variant of coronavirus. Thus, it would depend on the risk appetite of the investors to take a reasonable position on this company having strong revenue visibility over the medium term.

Considering the decent financial performance during H1 FY22, strong revenue visibility, robust cash generation, regular dividend payments, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on Totally PLC at the current market price of GBX 33.90 (as of 02 December 2021 at 08:55 AM GMT), with lower-double digit upside potential based on 23.87x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).

*The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and Peer information have been taken from REFINITIV.

*Dividend Yield may vary as per the stock price movement.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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