Pets at Home Group Plc (LON: PETS)

Business Overview
Pets at Home Group Plc is a leading per care company in the United Kingdom. The Group is a retailer of pet products, pet food, and other pet-related services. The company markets its products for cats, dogs, fish, birds, and other pets through pet retail stores.

Recent News
On 26^th March 2020, the company announced that its Independent Non-Executive Director, Paul Moody, would step down from the Board at the conclusion of the company's annual general meeting (AGM) on 9 July 2020.

Trading Updates- FY2020
The company reported its full year underlying pre-tax profit slightly ahead of expectations. In recent times, the Group had experienced exceptional levels of demand, both in-store and online, due to the COVID-19 crisis. The company reported that its existing customers increased average basket size by pulling forward purchases as well as new customers access its pet products and healthcare services. The Group reported total liquidity, including cash balances, is approximately £160m at the end of the financial year. The Group expected a net debt/EBITDA ratio of under 1.0x. The Group had taken certain measures regarding Coronavirus which include avoiding of travel, the adoption of alternative working arrangements for colleagues, procedures to protect the health and safety of its colleagues and customers and advice and support to colleagues on maintaining good health and wellbeing.

Share Price Performance  

Daily Chart as on 2^nd April 2020, after the market closed (Source: Thomson Reuters)

On April 2, 2020, at the time of writing (after the market close), Pets at Home Group Plcwere closed at GBX 238, down by 1 per cent against the previous day closing price. Stock’s 52 weeks High and Low are GBX 317.08/GBX 136.10. 

Valuation Methodology
 
Conclusion
In the Vet group segment, activities were impacted due to proposed adjustments made to fee arrangements for continuing Joint Venture practices. The United Kingdom market stays resilient in pet care. For the financial year 2020, the group anticipations for underlying PBT, before the impact of IFRS16, stays in line with existing market consensus. The guidance for 2020 reflects the impact of certain pre-openings costs relating to the Specialist Referral division, continuing investment in new customer acquisition, and Joint Venture fee adjustments. The company has shown decent trading performance in the third quarter of the financial year 2020 and expects to carry the same momentum in the full-year 2020 as well. Rising labour costs in the UK, intense competition and surge in shoplifting losses could limit the company's growth prospects. The company plans to buy out several JV (Joint Venture) vet practices, while performance in the ongoing estate remains decent. In the future, the company can face uncertainty across the broader retail sector.

Based on the risks factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of GBX 238 (as on 2nd April 2020, after the market close), with support from few catalysts needs to be evaluated at a later stage.

GCP Asset Backed Income Fund Limited (LON: GABI)

Business Overview
GCP Asset Backed Income Fund Limited is a listed investment company which focuses predominantly on investments in UK asset backed loans.

Financial Highlights- FY2019

(Source: Preliminary Report, Company Website)

In the fiscal year 2019, the company witnessed an increase in its market capitalization to GBP 479.1 million as compared to GBP 397.1 million in the fiscal year 2018. During the period, the value of investments stood at GBP 453.9 million. The company declared a dividend of 6.45p for the fiscal year 2019. NAV per share stood at 102.33p in the fiscal year 2019. The company reported a profit of GBP 28 million in the fiscal year 2019 as compared to GBP 21.6 million in the fiscal year 2018.

Share Price Performance  

Daily Chart as on 2^nd April 2020, after the market closed (Source: Thomson Reuters)

On April 2, 2020, at the time of writing (after the market close), GABI shareswere closed at GBX 74, down by 8.64 per cent against the previous day closing price. Stock’s 52 weeks High and Low are GBX 111.24/GBX 66. 

Conclusion
The company has reported decent financial performance in the financial year 2019. It had performed against its objectives, witnessed growth in its NAV and exceeding its dividend target for the fourth consecutive year. The company had declared dividend of 6.45 pence per share and generated a total shareholder return for the year of 10.2%. Its focussed investment Managers help the company to deliver a strongly performing portfolio for the Group. The portfolio comprises 45 loans, 94% of which are secured against physical assets offering strong downside and capital protection. Due to recent Coronavirus (COVID-19) outbreak, there is uncertainty regarding investments and its investment Manager is in talking terms with borrowers and tried to understand any impact on the portfolio. All borrowers had been following the guidance issued by the UK Government and have put appropriate protections in place. The company reported that there had been no impact on the company's cashflows till now. However, the Group is expecting some impact of Coronavirus on its business in the near term.

Based on the risks factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of GBX 74 (as on 2nd April 2020, after the market close), with support from few catalysts needs to be evaluated at a later stage.
 
*All forecasted figures and information have been taken from Thomson Reuters. 

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