Totally PLC (LON: TLY)  

Totally PLC is an FTSE AIM All-Share index listed leading healthcare service provider in the UK and Ireland, working in partnership with the NHS (“National Health Service) and other providers 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.

Recent trend of dividend payments

TLY had declared an interim dividend of 0.50 pence per share attributable for H1 FY22 to be paid in February 2022, 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.

(Source: Company Presentation)

Growth Prospects

• Acquisition of Energy Fit Pro: On 16 December 2021, the company has announced the acquisition of Energy Fitness Professional Ltd, which is a corporate fitness provider, for a total consideration of £1.3 million. The acquisition will allow accessing corporate workplaces and developing digital footprints.
• Extension of Contracts: The Company has recently announced an award of contracts and extensions related to its different sectors, namely Urgent care services, Planned care services and Insourcing.
• Substantial Operational progress: TLY had managed to treat approximately one million patients during H1 FY22.

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.
• Record UK Inflation: British Consumer Price inflation surged to 5.4% in December 2021, putting pressure on the Bank of England to raise interest rates again.
  

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 31 December 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 revenue which has increased by 13.78% to £61.57 million in H1 FY22 as compared to £54.11 million in H1 FY21.
• Strong Cash Position: TLY has cash and cash equivalent of £18.3 million in H1 FY22 and £12.28 million in H1 FY21, which is increased by 49%, resulting in higher total current assets.
• Robust Operating Profit: The operating profit of the Company had witnessed a robust increase from £0.16 million during H1 FY21 to £0.99 million for H1 FY22.
• Increase in Margins: TLY’s EBITDA, operating, and net margins have increased in H1 FY22 as compared to H1 FY21 due to ease of restrictions in the UK market.
  

Financial Ratios (H1 FY22)

Share Price Performance Analysis

(Source: Refinitiv; Analysis done by Kalkine Group)

On 20 January 2022, at 09:46 AM GMT, TLY’s shares were trading at GBX 33.00, down by around 1.49% from the previous day closing price. Stock 52-week High and Low were GBX 44.50 and GBX 25.00, respectively.

From a technical perspective, the stock price is hovering between the lower Bollinger band and the middle Bollinger band, indicating an upside potential in the stock price. Moreover, the 14-days RSI stood at ~45.30 levels. 

Valuation Methodology: Price/Earnings Approach (FY22) (Illustrative)

Business Outlook

The Company’s business confidence remained elevated during H1 FY22 as it has increased group dividend by 100% for the period. The divisions of the Company have won several contracts in multiple clinical specialities by reducing the waiting list of patients, and the Company has achieved robust business performance by providing multiple services on time. However, the stock price may undergo sizeable correction considering the low market capitalization. Thus, it would depend on investors sentiment to take a position on this company having a strong cash position and continuous award of contracts over the medium term.

Considering the decent financial performance during H1 FY22, acquisition benefits, 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 33.00 (as of 20 January 2022, at 09:46 AM GMT), with lower-double digit upside potential based on 21.76x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Note 3: Dividend Yield may vary as per the stock price movement.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios. 

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

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