Virgin Money UK PLC 

Virgin Money UK PLC (LSE: VMUK) is an FTSE 250 listed digital banking company. The Company indulges in the business of providing solutions in the space of financial services as well as banking. This Report covers the Investment Highlights, Conclusion, and Recommendation on the stock.

Investment Rationale – Sell at GBX 164.40

• Resistance near Current levels: VMUK’s stock price has breached the Resistance (R1) which was stated in the previous report on 27 October 2023, and might witness some sell-off from the current levels. Considering the market conditions and the price action, it is prudent to exit the stock, as the prices might pull back from these levels.
• Sluggish Profitability Margins: In H1 FY23, the Net Interest Margin of VMUK was 1.91% against the industry median of 2.10%, and the Efficiency Ratio declined to 59.6% in the reported period (H1 FY23) as compared to the industry median of 64.5%. Also, the Loan growth was negative 0.3% in H1 FY23 for VMUK versus the positive loan growth of 0.3% for the industry median.
• Increasing Non-performing Loans (% of Total Loans) ratios: The Nonperforming Loans (% of Total Loans) for VMUK was 1.57% in H1 FY22, 71% in H2 FY22, and 1.76% in H1 FY23, which indicates a concern on the bank's financial health.
• Lower Securities % Avg. Earning Assets: The bank posted its Securities % Avg. Earning Assets of 7.5% in H1 FY23 which is lower than the industry median of 12.6%.

Share Price Chart  

Conclusion

Based on the notional gains, macroeconomic challenges, and price action stance, a "SELL" recommendation on Virgin Money UK PLC (LSE: VMUK) has been given at the current market price of GBX 164.40 (as of 09 November 2023 at 08:15 AM GMT).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 09 November 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.