Euromoney Institutional Investor PLC – Operating with Strong Balance Sheet
FTSE 250-listed Euromoney Institutional Investor PLC (LON: ERM) is a multi-brand information company, which provides price reporting, critical data, insight, analysis and must-attend events to commodities, financial services, telecoms and legal markets. The operations of the group are differentiated in four segments, namely Asset Management, Pricing, Data & Market Intelligence, Banking & Finance, and Commodity Events.

On 19^th November 2020, the Company will announce its 2020 full-year results.

Financial Highlights (for the six months ended 31^st March 2020)

(Source: Interim Report, Company Website)

As on 4^th June 2020, the Group reported the half-year results for FY20. Overall results reflected a strong position despite a profit drop in H1 FY20. The Group revenue increased by 1% to £186.3 million in H1 FY20, it was driven by a positive contribution from Pricing, DMI (Data & Market Intelligence) and acquisitions partially offset by events affected by Covid-19. Events cancelled or postponed as a result of Covid-19 abridged revenue growth by 5ppt, operating profit margin by 2ppt. Adjusted pre-tax profit decreased by 15 per cent to £39.3 million, primarily driven by events cancelled due to COVID-19 and the Asset Management revenue decline. Statutory pre-tax profit was down by 24% to £37.4 million in H1 FY20.

Share Price Performance

1-Year Chart as at June-04-2020, before the market close (Source: Refinitiv, Thomson Reuters)

On 4^th June 2020, before the market close (at 12:53 PM GMT+1), Euromoney Institutional Investor PLC’s shares were trading at GBX 879.00 and were up by 13.57 per cent versus the previous day closing price. Stock 52 weeks High and Low are GBX 1,510.00/GBX 644.00.

From the technical standpoint, its shares were trading well above its short-term support level of 20-day simple moving average prices, which reflects an uptrend in the stock.

Valuation Methodology

*Peers: Relx Plc, Bloomsbury Publishing Plc, Ascential Plc, and Auto Trader Group Plc.

Growth Catalysts
In Asset Management, the growth in advertising is driven by strong sales in Institutional Investor media and research. The Group has consistent growth in Data & Market Intelligence, driven by People Intelligence and NextGen pillars.

Conclusion
The Group said it had implemented a robust plan to return the Asset Management segment to growth, which is showing a good sign.Targeting return of Investment Research Division non-vote Book of Business to growth by the end of FY22. The Company see further opportunities to innovate and develop 3.0 strategy. ERM has underlying growth in two of the three segments: robust performance in Pricing and good growth in Data & Market Intelligence. The strong balance sheet and resilient renewal rates in the subscription businesses, given confidence to the Company. The Group will emerge strongly from the current global crisis.

Based on the decent growth prospects and supported by valuation as done using the above method, we have given a "Buy" recommendation at the current market price of GBX 750.00 (as on 4th June 2020, before the market close at 8:00 AM GMT+1), with lower double-digit upside potential, based on 26.76x NTM Price/Earnings multiple (approx.) on FY20E earnings per share (approx.).
 
S&U PLC - 20th Consecutive Year of Increase in Profits from Motor Finance Segment Capabilities

S&U PLC (LON: SUS) is a United Kingdom-based company, which provides credit facility and financing of motorised vehicles. The Company is gradually capturing market share and positioning itself in the property market.

The Company will hold its Annual General Meeting (AGM) on 9^th June 2020.

Financial Highlights (for the year ended 31^st January 2020)

On 8^th April 2020,the Company announced record profits for S&U plc, delivering a slight increase over the previous year. The revenue increased by 8% to £89.9 million in FY20 as compared with the last year (restated 2019: £83 million). Customer numbers reached a record 64,000 (2019: 59,000). Group Profit before tax surged by 2% to £35.1 million against the last year (2019: £34.6 million). Aspen Property Bridging Finance increased cautiously, and profit before tax now increased to £1.2 million (2019: £0.8 million). Basic earnings per share stood at 239.6 pence (2019: 233.2 pence), a growth of 3% against the previous year. The Board declared a final dividend per share for the year of 50 pence (2019: 51 pence), representing a total dividend for the year increased by 2% to 120 pence per share (2019: 118 per share).

Share Price Performance

1-Year Chart as at June-04-2020, before the market close (Source: Refinitiv, Thomson Reuters)

On 4^th June 2020, before the market close (at 1:26 PM GMT+1), S&U PLC’s shares were trading at GBX 1,694 and were up by 3.93 per cent versus the previous day closing price. Stock 52 weeks High and Low are GBX 2,500.00/GBX 1,420.

From the technical standpoint, its shares were trading well above its short-term support level of 20-day exponential moving average prices, which reflects an uptrend in the stock.

Valuation Methodology 
 


Growth Catalysts
In Group cash flow, it has continued motor book growth in advances and collections, and steady growth in Aspen in slower property bridging market. In Aspen, the Group witnessed solid profits growth despite an uninspiring property market.

Conclusion
The company had delivered growth in top-line and bottom-line performance for the financial year 2020.The demand for the Advantage's motor finance remained strong and was ahead of the last year’s data. As per the guidance, the company provide a strong platform for further growth next year. Although the COVID-19 crisis presents unprecedented challenges, the group has strong financial foundations and 80 years of rich experience, which  makes them well placed to meet all the challenges.

Over the course of 4 years (FY16 – FY20), the company’s revenue surged from GBP 45.2 million in FY16 to GBP 89.90 million in FY20. Compounded annual growth rate (CAGR) stood at 18.76 per cent.

Based on the decent fundamental prospects and supported by valuation as done using the above method, we have given a "Speculative Buy" recommendation at the closing price of GBX 1,630 (as on 3^rd June 2020) with lower double-digit upside potential based on 7x NTM Price/Earnings multiple (approx.) on FY21E earnings per share (approx.).
 
River and Mercantile Group PLC – Sustainable Dividend Growth with Well-Positioned Business Growth Trajectory

London, the United Kingdom-based River and Mercantile Group PLC (LON: RIV) is an asset management and advisory services, focussing on consulting and advisory to fiduciary and fund management.

Recent News
On 19^th May 2020, the Group said Simon Wilson had joined as Chief Financial Officer and director of the Company.

Third Quarter Trading Update (as on 8th April 2020)
For the three months ended 31st March 2020, the fee earning AUM (Assets Under Management) /NUM (Notional Under Management) decreased by 4.3% to £40.5 billion. Fee earning AUM/NUM surged in the nine months ended 31st March 2020 by 1.6% to £40.5 billion. The Group sales stood at £2.2 billion in Q3 FY20 and £5.2 billion in nine months of FY20. The Company witnessed decent growth in the current period, with net flows of £434 million in Q3 FY20 and net Sales ratio was 1% of opening AUM/NUM (9M FY20: 5.5%). The Group confirmed that the first interim dividend per share of 4.39 pence, which was paid on 16 April 2020.

Share Price Performance

1-Year Chart as at June-04-2020, before the market close (Source: Refinitiv, Thomson Reuters)

On 4^th June 2020, before the market close (at 10:31 AM GMT+1), River and Mercantile Group PLC’s shares were trading at GBX 190.00 and were up by 6.29 per cent versus the previous day closing price. Stock 52 weeks High and Low are GBX 300.14/GBX 152.00.

From the technical standpoint, its shares were trading well above its short-term support level of 20-day simple moving average prices, which reflects an uptrend in the stock.

Valuation Methodology


Conclusion
The bottom-line performance and profitability have declined in the first half of 2020. The operations of the Company are backed by efficient management and huge market opportunity which will help the group to scale up their footprints and acquire more customers. The global outlook stays uncertain with challenges arising from the coronavirus (COVID-19) pandemic. It’s been very encouraging to see the contribution to growth from both investment performance and net rebalancing. The Group has continued to perform well through the current period and delivered robust gross sales of £2.2 billion across the diversified business entities, with Fiduciary sales of £865 million, Derivatives sales of £1 billion, and Equity sales of £281 million. The Company has witnessed growth in demand for derivatives solutions offered by the company.

Based on the decent prospects which are supported by valuation done using the above method, we have given a “Speculative Buy” recommendation at the closing price of GBX 178.75 (as on 3^rd June 2020) with lower double-digit upside potential based 17.00x NTM Price/Earnings (approx.) on FY20E earnings per share (approx.).
 
 
*All forecasted figures and Peer information have been taken from Refinitiv, Thomson Reuters.
* The “Speculative Buy” recommendation is valid for the current price as covered in the report as on 4^th June 2020.

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