GlobalData PLC (LON: DATA) – Trading in line with management expectations.

GlobalData PLC is a FTSE AIM 100 quoted Company, which provides market data intelligence. It has been serving over 4,000 clients, including companies across various industries, financial institutions, government organizations and professional service firms.

On 1 March 2021, GlobalData expects to announce its financial results for FY20 (ended 31 December 2020).

Investment Rationale – Speculative Buy at GBX 1,180.00

• The Board appeared confident to sustain the strong trading momentum in November and December, and thus, deliver a strong finish to the FY20 and start the FY21 with a significant percentage of annual revenues already secure.
• From a technical perspective, 90-day RSI (33.73) is reflecting an upward trend and upside potential.
• Meanwhile, EBITDA margin and net margin have remained above 23.80% and 5.40%, respectively, over the last two half-years, which is substantially higher than the industry median.
• Over the past four years (H1 FY16 to H1 FY20), revenue and gross profit have surged at a CAGR of ~16.46% and ~23.03%, respectively.

Risk Assessments

• Restricted travel or gatherings have affected the events performance. Also, the business is exposed to unfavourable currency fluctuations.
• The Covid-19 pandemic has created unprecedented challenges and abnormal trading conditions.
• Adjacently, the Company debt level has increased recently, which can also create a liquidity risk. Further, the Group operates in highly competitive yet fragmented markets.

Recent News

5 January 2021: Bernard Cragg decided to step down as Chairman, and will be succeeded by Murray Legg with effect from the AGM.

Trading Update for the 10 months to 31 October 2020 (as on 25 November 2020)

• Despite the Covid-19 headwinds, revenue (excluding events) increased by 5% year-on-year (excluding events), due to an increase of 7% in subscription revenue in the 10 months ended 31 October 2020.
• Similarly, the forward contracted revenue surged by 8% year-on-year in the period.
• At the end of Q3 FY20 and the start of Q4 FY20, the strong momentum of sales order growth was seen.
• During the period, the adjusted EBITDA was up by 12% year-on-year, with an increase in the margin of 3% points.

One Year Share Price Chart

 (Source: Refinitiv, chart created by Kalkine Group)

Valuation Methodology: Price/Cash Flow Approach (NTM) (Illustrative)

Conclusion

Despite the challenging trading environment, the Group is benefitted from considerable recurring revenue and demonstrated the advantage of a central operating model and a single product platform. GlobalData has continued to perform well as adjusted EBITDA was 12% up year-on-year for the 10 months to 31 October 2020, while the cash flow from operations was 8% up versus the previous period. The full year Adjusted EBITDA for the current financial year is expected to be in line with the Board's expectations. The Stock made 52-week High and Low of GBX 1,750.00 and GBX 830.00, respectively.

Based on the business capabilities, industry prospects and valuation conducted above, we have given a “Speculative Buy” recommendation on GlobalData PLC at the current market price of GBX 1,180.00 (as on 11 February 2021 before the market close at 8.08 AM GMT) with lower double-digit upside potential based 38.00x Price/Cash Flow (approx.) on FY20E Cash Flow Per Share (approx.).

LoopUp Group PLC – Confirmed to report robust FY20 results.

LoopUp Group PLC (LON: LOOP) is a FTSE AIM All-Share quoted Company, which provides premium cloud communications services.

On 23 March 2021, the Group will announce preliminary results for FY20.

Investment Rationale – Speculative Buy at GBX 74.00

• FY20 revenue is expected to be nearly £50 million (nearly 18% growth on FY19), and EBITDA to be no lower than £15 million (around 134% growth on FY19).
• The pipeline for cloud telephony live opportunities continued to grow rapidly, and thus, potential Total Contract Value of approximately £84 million is 68% higher than reported in half-year statement.
• In terms of a technical indicator, 14-day RSI (38.48) is supporting the upside potential.
• Over the past two years (H1 FY18 to H1 FY20), revenue and gross profit have increased at a CAGR of ~62.98 %, and ~59.47%, respectively.

Risk Assessments

• There is a high degree of uncertainty relating to societal and economic effects of the Covid-19 pandemic.
• Due to operational challenges, LOOP might fail to deliver on existing and new contracts.

Recent News

21 October 2020: LOOP announced the launch of LoopUp Rooms, which shall facilitate premium video conferencing suites more cost competitive, accessible and intuitive for users.

Trading Update (as on 8 February 2021)

• For FY20, LOOP expects to report revenue of nearly £50.2 million in FY20 (FY19: £42.5 million) and EBITDA of around £15.3 million (FY19: £6.4 million).
• Besides strong trading, it also reported a solid state of balance sheet.
• The gross cash at the year-end was £12.1 million (FY19: £3.0 million), while net debt reduced to £0.7 million (FY19: £11.5 million).

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

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

Conclusion

LOOP has also won contracts from two top-100 law firms and one of the world's top-5 law firms. It has also expanded distribution partnership with C&W Communications in the Caribbean and Latin America to FY2022. It continued to witness strong momentum in Cloud Telephony business since launching it to a global cloud platform in July 2020. Overall, the Group appears to be confident in its ability to achieve sustainable and profitable growth and intends to invest from its cash balance to maximise shareholder value creation. Considering the level of uncertainty and instability, LOOP failed to provide specific guidance on near-term market expectations. However, the strong growth achieved in FY20 will enable investment in the sustainable growth of recently augmented product offering, which now allows customers to make and receive external calls via Microsoft Teams, and provides the opportunity for expanding the addressable market. Stock 52 week High and Low were GBX 250.00 and GBX 39.00, respectively.

Given the strong trading momentum and the valuation done using the above method, we have given a “Speculative Buy” recommendation on LoopUp Group PLC at the current market price of GBX 74.00 (as on 11 February 2021, before the market close at 08.33 AM GMT) with lower double-digit upside potential based on 6.82x Price/NTM Earnings (approx.) on FY20E Earnings Per Share (approx.).

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

*All forecasted figures and Industry/Peer information have been taken from Refinitiv, Thomson Reuters.

Disclaimer

PLEASE BE ADVISED THAT YOUR CONTINUED USE OF THIS SITE OR THE INFORMATION PROVIDED HEREIN SHALL INDICATE YOUR CONSENT AND AGREEMENT TO THESE TERMS.

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine is not responsible for material posted on this website and does not guarantee the content, accuracy, or use of the content in this site. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated.

Kalkine do not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional licensed financial planner and adviser.