Trainline Plc – Offering Platform for Coach and Rail Travel to Global Travellers

Trainline Plc (LON: TRN) is a United Kingdom-based online ticket retailer, serving 45 countries, with more than 270 carriers and 96 million visits per month.


Financial Highlights – Decent Revenue Growth for Financial Year 2020

(Source: Annual Report, Company Website)
 
For the financial year ending 29^th February 2020, the net ticket sales surged by 17 per cent to GBP 3,727 million as against GBP 3,194 million in FY2019, due to improved adoption of eticket in the United Kingdom. In FY2020, the group’s revenue increased by 24 per cent from GBP 210 million in FY2019 to GBP 261 million in the Financial Year 2020. The adjusted EBITDA went up by 62 per cent to GBP 85 million in FY2020 versus GBP 53 million in FY2019, driven by operating leverage achieved around its cost base and growth in volumes. The operating profit declined significantly by 78 per cent fromGBP 11 million in the financial year 2019 to GBP 2 million in the financial year 2020. The group’s adjusted basic earnings per share stood at 8.1 pence in FY2020 versus2.4 pence in FY2019, reflecting an increase of 5.6 per cent. The reported basic loss per share declined by 14.4 pence to 17.7 pence in FY2020 from 3.3 pence in FY2019. The operating free cash flow increased by 39 per cent from GBP 42 million in FY2019 to GBP 59 million in the financial year 2020. The leverage declined to 0.8x in the financial year 2020 from 3.7x in FY2019, reflecting benefits from IPO proceeds and generation of strong cash flow.

Share Price Performance

Daily Chart as of15^th May 2020, after the market closed (Source: Refinitiv, Thomson Reuters)

Trainline Plc shares closed at GBX 391.80 at the time of writing after the market close on 15^th May 2020. Stock's 52 weeks High is GBX 559.58 and Low is GBX 187.20.

From the technical standpoint, 14-day RSI is currently hovering in an overbought zone and stock price can decline further.

Valuation Methodology

*Peers: Rightmove Plc, Ocado Group Plc, Auto Trader Group Plc and Moneysupermarket.Com Group Plc.

Key Risks
Environment and sustainability issues such as climate change, etc. could affect the revenue and profitability of the company. Any change in regulations and government policies could affect the overall business of the company. Macroeconomic and geopolitical factors could affect the performance of the company. Fluctuation in foreign exchange rates could affect the profitability of the company. Uncertainty regarding COVID-19 outbreak.

Conclusion
From the perspective of the market, the rail industry has been disturbed by several geopolitical events in the current year, such as extreme weather and coronavirus outbreak events. For the travel and tourism industry, environmental factors impact the operating parameters and passenger demand and passenger volumes dipped by more than 95 per cent in the first quarter of the FY2020. The company has delivered a decent financial performance during the financial year 2020. The Group expect strong growth in International and UK Consumer markets with the launch of the split-ticketing feature in the mobile app. In international, while French ticket sales were impacted by the nationwide rail strike. Some external challenges will persist in the financial year 2021. Therefore, the company will mainly focus on becoming extra cost-competitive in the Markets & Rail segment to extend and protect the market share as possible. As the company operates in multiple geographies, its profits can be impacted negatively due to foreign exchange rate fluctuations. Currently, the stock is trading near the 52-week high, suggesting that the upside potential might be limited.

Based on the above rationale and risks associated, we recommend investors to keep a “Watch” on the stock at the closing price of GBX 391.80 (as on 15^th May 2020), with support from few catalysts needs to be evaluated at a later stage.

Lamprell Plc – With Long-term Objective to Increase Global Reach

Lamprell Plc (LON: LAM) is a Dubai, United Arab Emirates-headquartered, a key player in the oil & gas and renewable energy markets, which provides fabrication, engineering, and contracting services. 

Financial Highlights – Declined Financial Performance in FY2019 (31^st December 2019)

(Source: Annual Report, Company Website)
 
For the financial year ending 31^st December 2019, the revenue surged to USD 260.4 million versus USD 234.1 million in the financial year 2018. The LBITDA stood at USD 64.6 million in the financial year 2019 versus LBITDA of USD 35.1 million in FY2018, with an EBITDA margin of negative 24.8 per cent for the period. Due to higher operating expenses for the period, the group reported an operating loss of USD 169,144 thousand in FY2019 versus an operating loss of USD 55,396 thousand in FY2018. Due to an increase in the finance costs, the LBT (loss before tax) stood at USD 184,382 thousand in FY2019 versus LBT (loss before tax) of USD 69,485 thousand in FY2018. The group’s loss for the year from continuing operations stood at USD 183.5 million in FY2019 versus loss for the year from continuing operations of USD 70.7 million in FY2018. The reported basic and diluted loss per share stood at 53.71 cents in FY2019 versus a basic and diluted loss per share of 20.67 cents in FY2018.

Share Price Performance

Daily Chart as of15^th May 2020, after the market close (Source: Refinitiv, Thomson Reuters)

Lamprell Plc shares closed at GBX 8.76 at the time of writing after the market close on 15^th May 2020. Stock's 52 weeks High is GBX 69.60 and Low is GBX 7.02.

From the technical standpoint, its shares were trading below its short-term 20-day simple moving average price, which reflects a downtrend in the stock and carrying the potential to move down further.

Valuation Methodology

*Peers: Gulf Marine Services Plc, ADES International Holding Plc, Petrofac Ltd and Genel Energy Plc.

*Currency Exchange Rate for 1 USD = 0.82608 GBP.

Key Risks
Any change in regulations and government policies could affect the overall business of the company. Risks related to environment and climate change could hamper the operations of the company. Liquidity and interest rate risks which could affect the operations of the company.

Conclusion
The group has shown a decline in financial performance in the financial year 2019. Although the revenue has increased, the bottom-line performance has declined, and profitability remained in the negative zone for the period. The company need to manage its operating costs effectively unless it impacts the operational performance in the coming years. At the beginning for FY2020, the group’s international business was materially impacted by plunging oil price and impact of the COVID-19. LAM continues to operate as per the UAE government guidelines and have enabled remote access for its employees. Due to the outbreak of coronavirus, productivity has hampered and increased the costs of the company. The group has remained well-positioned for new projects, but the recent outbreak has made financial position challenging. The group is seeking additional liquidity to explore its available growth opportunities.

Based on the headwinds faced by the group, we have given a "WATCH" recommendation at the closing price of GBX 8.76 (as on 15^th May 2020), while we look for any upcoming catalysts in the near term.
 
*All forecasted figures and Peer information have been taken from Refinitiv, Thomson Reuters.

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