British American Tobacco PLC

British American Tobacco PLC (LON: BATS) is based out at London and is one of the leading, multi-category consumer goods companies in the world with core business focus around tobacco, which seeks to provide consumers with high-quality tobacco products.

On 27^th February 2020, the company will announce the preliminary results for the year ended 31 December 2019.

Recent News
On 3^rd January 2020, the company welcomes the United States FDA's guidance that a properly regulated vapour classification continues to deliver a credible alternative to smoking. Across all product categories, suitable enforcement will guarantee the sustainability of adult customer choice. Reynolds American Inc. (RAI), is a BAT's U.S. subsidiary which stands ready to comply with the brand-new flavour guidelines. PMTA application is the first brand of RIA and this had been submitted.

Dividend
The Board had declared an interim dividend per ordinary share of 203 pence, payable in 50.75 pence per ordinary share of four equal quarterly instalments in May 2019, August 2019, November 2019 and February 2020.

Pre-Closing Trading Update (as on 27^th November 2019)
The full-year 2019 adjusted revenue growth is expected at the upper half of the 3%-5% range at constant currency.On an adjusted basis, the FY2019 operating margin will increase in the range of 50-100 bps. On a constant currency basis, the adjusted diluted earnings per share are expected to increase by high single-digit in FY19, with a currency translation tailwind of approximately 1.2 per cent, and a headwind of approximately 2 per cent for 2020. The company’s volumes for the FY2019 to be widely in line with the industry. In the second half of 2019, the group expects to increase revenue in the new categories. In the financial year 2019, the new category revenue development at the lower end of the range of 30%-50% at constant currency, reflecting the slowdown in the United States vapour market. The free cash flow after dividends on track for £1.5 billion in FY19. In the medium-term period, the company rating target stays BBB+/Baa1, with a present rating of BBB+/Baa2.

Share Price Performance

Daily Chart as at January-06-20, before the market closed (Source: Thomson Reuters)

On 6^th January 2020, British American Tobacco PLC shares were trading at GBX 3,325.10 at the time of writing before the market close (at 8:15 AM GMT), down by 0.80% against the previous day closing price. Stock's 52 weeks High and Low are GBX 3,363.50/GBX 2,249.

Conclusion
With the U.S. FDA, the company will continue to work throughout the execution of this new regulatory framework to make sure customers have access to quality-assured productswhile doing the utmost to ensure that vaping stays well-positioned as a credible option for smokers looking for an alternative to tobacco.

In 2019, the company expect to deliver robust performance, driven by good progress in the first half of 2019. The emphasis is on the international strategic brands in delivering robust price mix and share gains in combustibles, both in the United States and globally.

For the second half of 2019, the company is delivering good New Category revenue growth,with increased investment and new product launches. The group is investing in New Categories and transforming the enterprise to generate a simpler, stronger, more agile BAT. The company is on track for the robust financial year 2019. The company is also driving value progress in combustibles.

Therefore, based on the above-discussed factors, we have given a “Hold” recommendation at the current price of GBX 3,325.10 (as on January 06, 2020, before the market close).

Standard Life Aberdeen PLC

Standard Life Aberdeen PLC (LON: SLA) is a financial services company headquartered in Scotland and has operations in 50 locations globally. The company administer and manage assets across Australia, the Middle East, Asia, the Americas and Europe.

On 10^th March 2020, the company will announce the full-year results in 2019.

Dividend
Interim dividend per share remained unchanged at 7.30 pence for the period. The dividend payment is anticipated to be £173 million.

Financial Highlights (for the six months ended 30 June 2019)
In the first half of the financial year 2019, reflecting a positive market movement and investment performance, assets under management and administration increased to GBP 577.5 billion from GBP 551.5 billion in H1 FY2018, while gross inflows remained strong at GBP 36.5 billion in H1 FY2019 and decreased from GBP 37.4 billion reported in H1 2018. Net outflows were at GBP 15.9 billion in H1 FY2019 versus an outflow of GBP 16.9 billion in H1 2018, reflecting lower gross inflow and weak market sentiment. Due to unfavourable market movements in H2 2018, fee-based revenue decreased by 16 per cent from GBP 966 million in H1 2018 to GBP 815 million in H1 FY2019. The adjusted diluted earnings per share were 8.9 pence in H1 FY2019, while reported diluted earnings per share stood at 27 pence for the period.

Share Price Performance

Daily Chart as at January-06-20, before the market closed (Source: Thomson Reuters)

On 6^th January 2020, Standard Life Aberdeen PLC shares were trading at GBX 324.10 at the time of writing before the market close (at 9:17 AM GMT), down by 1.85% against the previous day closing price. Stock's 52 weeks High and Low are GBX 338.25/GBX 208.85.

Conclusion
The company released on 3^rd December 2019, that the offers for sale of shares in HDFC AMC (HDFC Asset Management Company Limited) by SLI (Standard Life Investments Limited).Despite the company reported net outflows, the rate slowed during the period, and total investment performance progressed steadily.

Over the last 12 months, the group has returned shareholders a substantial capital and is focused on driving operational efficiency and cost control.Political uncertainties and macroeconomic headwinds may continue to impact the current business environment and investors sentiments. However, the group with its diverse range of resources is well placed to take benefit of the prospects and to deal with the challenges.

Based on the above rationale, we have given a “HOLD" recommendation at the current price of GBX 324.10 (as on 6^th January 2020, before the market close).

Direct Line Insurance Group PLC

Direct Line Insurance Group Plc (LON: DLG) is a general insurance company based out of the United Kingdom. The company, along with its subsidiaries, provides a range of personal and commercial non-life insurance products. The company differentiates its business in four operating segments: Home, Motor, Commercial and Rescue and other personal lines.

On 3^rd March 2020, the company will announce the 2019 preliminary results.

Dividend
An interim ordinary dividend increased by 2.9% to 7.2 pence per share. Currently, the company’s dividend yield is 6.70%.

Financial Highlights (for the three months to 30 September 2019, £million)

(Source: Trading Update, Company Website)

The company witnessed signs of improvement in the second half of the financial year. The company’s gross written premium from motor business surged by 0.3 per centversus Q3 FY2018 data. The company’s gross written premium from home business declined by 4.9 per cent versus Q3 FY2018 data. From this, there had been a significant improvement on previous quarters and the positive trend has continued into Q4. The gross written premium from Rescue and other personal lines was up by 3.5 per cent versus Q3 FY2018 data. The company’s direct Rescue brand, Green Flag’s gross written premiums surged by 15.5 per cent versus Q3 FY2018 data. The gross written premium from Commercial business was up by 5.3 per cent versus Q3 FY2018 data.

Share Price Performance

Daily Chart as at January-06-20, before the market closed (Source: Thomson Reuters)

On 6^th January 2020, Direct Line Insurance Group PLC shares were trading at GBX 312.30 at the time of writing before the market close (at 9:44 AM GMT), down by 1.26% against the previous day closing price. Stock's 52 weeks High and Low are GBX 358.69/GBX 266.70.

Conclusion
In the current period, the company’s performance is in a well-positioned, with motor returning to moderate acceleration, helped by improving market conditions.The company anticipate capital expenditure will start to decrease from its peak in 2019 and for all the major IT platforms to be significantly rolled out by the end of the year 2021. Motor claims severity inflation stayed at the upper end of long-term anticipations in the range of 3%-5%, with frequency in 2019 continue to increase as compared to 2018. The company is planning for additional product releases, comprising tradesperson products and transitioning Van on to the new system.

Over the course of 4 years (FY14 - FY18), the company’s revenue surged from GBP 3,349.10 million in FY14 to GBP 3,436.70 million in FY18. Compounded annual growth rate (CAGR) stood at 0.65 per cent.

Based on the above rationale, we have given a “HOLD" recommendation at the current price of GBX 312.30 (as on 6^th January 2020, before the market close).

Persimmon PLC

Persimmon Plc (LON: PSN) is a well-known UK's leading housebuilders. It was founded in 1972. Persimmon Homes, Charles Church and Westbury Partnerships are the three brands of the company.

On 15^th January 2020, the company will announce the trading update.

Third Quarter Trading Statement (as on 7^th November 2019)
The company has delivered 2,100 new homes in the financial year to date.The company’s average weekly private sales reservation rate per site stood at c. 0.67, which was in line with the last fiscal year. The company is now entirely sold up for the current year and holds £950 million of forwarding sales reserved beyond 2019 against £987 million reserved in last year. Sales prices stood firm across the regional markets, and cancellation rate remained in line with the year-over period, at historically low levels. While the company currently anticipate the consistent application of this approach to result in a similar situation in H2 FY19, the company also anticipate that second-half volumes will be greater than for the first half, reflecting the normal seasonality of the market.

Share Price Performance

Daily Chart as at January-06-20, before the market closed (Source: Thomson Reuters)

On 6^th January 2020, Persimmon PLC shares were trading at GBX 2,678 at the time of writing before the market close (at 10:44 AM GMT), down by 0.30% against the previous day closing price. Stock's 52 weeks High and Low are GBX 2,950/GBX 1,802.50.

Conclusion
On 1^st July 2019, the company became the first United Kingdom housebuilder to launch a client retention scheme.The company’s outlook regarding the industry is positive. High levels of employment, lower interest rates and a competitive mortgage market could increase the housing demand, which would benefit the company. The company is expecting a seasonal increase in housing activity. The company is making an investment in its customer care resources and processes, which could place the business in a strong position. The Help to Buy scheme, which is stated to be in place till 2023 and has helped the company in posting strong results, while company’s focus on low to the mid housing market and in North England helps it to cushion the blow from Brexit-related effects on the property market.

Over the course of 4 years (FY14 - FY18), the company’s housing revenue surged from £2,573.9 million in FY14 to £3,545.8 million in FY18. Compounded annual growth rate (CAGR) stood at 8.34 per cent.

Based on the rationale as highlighted above, we have given a “Hold” recommendation at the current price of GBX 2,678 (as on 6^th January 2020, before the market close).

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