GB Group PLC 

GB Group PLC (LSE: GBG) is an FTSE AIM UK 50 index-listed Company supporting clients to validate and verify the identity & location of their customers. The Company's solutions help organizations to validate and verify the identity and location of their customers. Its segments include Location, Identity, and Fraud. This Report covers the Investment Highlights, Conclusion, and Recommendation on the stock.

Investment Rationale – Sell at GBX 277.40

• Resistance near Current levels: GBG’s stock price crossed the Resistance (R2) stated in the previous report on 20 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 FY24, the Gross margin of BRCK was 69.2% against the industry median of 82.0%, and the EBITDA margin declined to 18.9% in the reported period (H1 FY24) as compared to the industry median of 29.4%. Also, the net margin slipped to negative 41.7% in H1 FY24 versus the industry median of 15.7%.
• Declining liquidity ratios: The group’s quick ratio for H1 FY24 was reported at 0.89x, lower than the industry median of 1.28x. Also, the GBG’s current ratio declined to 0.91x when compared against the industry median of 1.40x.

• Inefficient Debt Management: During H1 FY24, the company reported a higher Debt/ Equity ratio of 0.20x, when measured against 0.17x in H1 FY23. To add more, the % of long-term Debt to the Total Capital of GBG rose to 16.3% in H1 FY24, as compared to 14.3% in H1 FY23.

Share Price Chart  

Conclusion

Based on the notional gains, macroeconomic challenges, and price action stance, a "SELL" recommendation on GB Group PLC (LSE: GBG) has been given at the closing market price of GBX 277.40 (as of 22 December 2023).

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 21 December 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.