Hammerson Plc

Hammerson Plc (LON: HMSO) is a FTSE 250 listed investment management and property development company.

Investment Highlights – Avoid at GBX 38.52

• On a trailing 12 months, EV/EBITDA and Price/Earnings multiples are significantly higher as compared to corresponding multiples of the Residential and Commercial REITs industry, reflecting overstretched valuations.
• The Company’s profitability metrics are in negative territory, whereas the industry has been delivering positive numbers.
• The Company is dependent upon funding through external sources to run its business operations.
• From a technical standpoint, 14-day RSI reflects that the stock price could decline in the short term.

Key Risks

• The potential credit risk from tenant defaults amid recessionary economic conditions.
• Risk pertinent to liquidity and Brexit concerns.

Recent News

On 21 April 2021, the Company disposed of its seven retail park assets to Brookfield for consideration of £330 million cash proceeds.

On 20 April 2021, the Company has appointed Himanshu Raja as a Chief Financial Officer and Executive Director, effective from 26 April 2021.

Operational and Rent Collection Update (as on 20 April 2021)

• 40% of the second half of 2021 rent due has been received to date (20 April 2021), with the UK collecting 48%, Ireland 34% and France 23%.
• In H1 FY21, it has received around 46% rent.
• As per the operational update, the UK market is re-opening, with an initial footfall recovery in England and an increase in Scotland occupier.

One Year Share Price Chart

 (Source: Refinitiv, Thomson Reuters)

Conclusion

During 2020, the household business was affected by Covid-19. In terms of 2020 results, the Company was hit hard, with an increasing number of retail failures. It has few construction projects in the pipeline, which might not give good performance in the near term due to the delay of the projects and additional costs. Moreover, the consequence of the macroeconomic impact is still uncertain. The stock made a 52-week low and high of GBX 14.05 and GBX 64.69, respectively.

Based on the headwinds faced by the Company, we have given an “Avoid” recommendation on Hammerson Plc at the current price of GBX 38.52 (as on 10 May 2021 at 10:10 AM GMT).

Guild Esports Plc

Guild Esports Plc (LON: GILD) is a UK-based developer of esports teams, which has commenced trading on the London Stock Exchange from 2 October 2020, under the ticker symbol GILD.

Investment Highlights – Avoid at GBX 7.095

• At present, the Company is not generating any revenue and is a lossmaking entity which is yet to prove its operational and financial viability.
• On a trailing 12 months, EV/EBITDA, Price/Earnings, and Price/Cash Flow are in the negative domain.
• Despite the decent financial performance in FY2020, the Company expects the trading environment to remain uncertain in the near term.
• From the technical standpoint, 14-day RSI is near to the over-bought territory, which means that the stock price could decline in the short term.

Key Risks

• The inability to attract sufficient sponsors can impact the growth trajectory.
• The Company does not have a proven track record, and it is competing against the established players in the market.
• The macro factors continued to impact operational performance adversely and resulted in an increased risk.

Recent News

On 19 April 2021, the Company won its second major trophy after its Rocket League Championship Series (RLCS). During 15-18 April 2021, it achieved first-place in RLCS EU Spring Regional.

On 7 April 2021, the Company announced that the total viewership of the Social media, the Guild network, is targeted to double to 10.4 million, after the signing of Nikita 'Nihachu' Sembowski.

Financial Highlights (for the period ended 30 September, as on 29 January 2021)

(Source: Company Website)

• The Company had not generated any revenue, while the loss before tax stood at £2.7 million.
• It also established its esports teams to compete in Rocket League and FIFA.
• At the period end, the net cash stood at £1 million. Moreover, on 28 January 2021. It’s cash and near-cash increased to £18 million from the previous period.

One Year Share Price Chart

 (Source: Refinitiv, Thomson Reuters)

Conclusion

For 2021, it is on track to deliver strong growth in fan base and sponsorship revenues. The Board of GILD believes that there is significant potential in the esports market, which is experiencing rapid growth and grow from $1 billion in 2019 to $1.6 billion by 2023. Moreover, the total viewing audience is expected to increase to around 650 million in 2023 from 400 million. However, the Company is in the development stage and hence rely on grants and cash balances to carry on all the business activities. The operations are financed by the sale of equity securities by private placements. The Bottom-line performance remained in the negative zone. The Company do not have substantial catalysts to support the growth, and hence, it appears to be a quite risky bet to invest in the stock. The stock made a 52-week low and high of GBX 5.00 and GBX 10.00, respectively.

Based on the factors discussed above, we have given an “Avoid” recommendation on Guild Esports Plc at the current price of GBX 7.095 (as on 10 May 2021 at 10:50 AM GMT), while we look forward to reviewing the upcoming catalysts and market dynamics.

Hemogenyx Pharmaceuticals Plc

Hemogenyx Pharmaceuticals Plc (LON: HEMO) is a Pharmaceuticals & Biotechnology Company, developing new treatments and medicines to treat autoimmune and blood disease.

Investment Highlights – Avoid at GBX 2.30

• The Company has not reported the revenue in the period, which raises uncertainty regarding its earning potential.
• The Company’s profitability margins and Return on equity remained in the negative zone from the last three years.
• On a trailing 12 months, Price/Earnings, EV/EBITDA and Price/Cash Flow metrics are in the negative zone as compared to the industry multiples.
• From the technical standpoint, shares were trading below the short-term support level of 200-day (GBX 8.08) simple moving average price, which reflects a downtrend in the stock and can decline further.

Key Risks

• The growth trajectory of the business could be impacted due to existing as well as emerging risks and uncertainties.
• Also, the increased competition can lead to the market share decline and income shortfall.

Financial Highlights (for the year ended 31 December 2020 (FY20), as on 30 April 2021)

(Source: Company Website)

• The Company had not generated any revenue, while the loss for the year at £2.1 million.
• During the period, it entered into an agreement with Eli Lilly for the development of new treatments of autoimmume diseases, while it also entered into an agreement with the University of Pennsylvani.
• At the period end, the Company has cash and cash equivalents of £1.8 million.

One Year Share Price Chart

 (Source: Refinitiv, Thomson Reuters)

Conclusion

The Company is in the development stage and do not generate any revenue for the period. Further, the near-term economic outlook stays unclear.  Moreover, the Covid-19 pandemic continued to create operational challenges while the global uncertainty remained over the supply chain distribution. In the future, the Company may face emerging headwinds and cost pressures. Furthermore, the prolonged impact of the COVID-19 outbreak continued to affect its financial results, plans, operations, outlook, goals, reputation, liquidity and stock price. The stock made a 52-week low and high of GBX 2.15 and GBX 15.40, respectively.

Based on the headwinds faced by the Company, we have given an “Avoid” recommendation on Hemogenyx Pharmaceuticals at the current price of GBX 2.30 (as on 10 May 2021 at 11:10 AM GMT).

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

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