Bakkavor Group Plc (LON: BAKK)

Business Overview
Bakkavor Group Plc is a London-headquartered leading provider of freshly prepared food in the UK, which makes ready to eat, ready to reheat or ready to cook products and seeks to develop and produce innovative food for a wide variety of occasions and budgets. In China, the company supplies international and local foodservice operators, while it works with leading grocery retailers, focusing on their own label brands, in the UK and US, as it seeks to exploit significant opportunities in the US and China. The operations of the group are differentiated in two geographical segments, namely UK and International. 

Recent News
On 16^th January 2020, the company announced a trading update for the financial year 2019 ended on 28^th December 2019.

Trading Update – Financial Year 2019
During the fiscal year 2019, the company’s revenue increased by 1.5 per cent on a reported basis and on a like-for-like basis increased by 1.7 per cent as compared to the corresponding period of the fiscal year 2018 due to encouraging progress made across the Group. Underlying volume growth has been impacted by the weak consumer confidence in the UK. Revenue increased by 0.2 per cent in the UK on a like-for-like basis, due to a gain in H2 in its meals business. The International business delivered volume growth resulting in a 12.8 per cent increase in like-for-like revenue as the company broaden its customer base in both regions. The Group has expected full-year results to be in line with the company’s expectations.

Share Price Performance

Daily Chart as on 28^thJanuary 2020, before the market closed (Source: Thomson Reuters)

On January 28^th, 2020 Bakkavor Group Plc shares were trading at GBX 134 at the time of writing before the market close (at 9:25 AM GMT), down by 2.05 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 172.60/GBX 91.50. The stock price has givennegative 2.6 per cent returns during the previous year. In the last three months, it has given10.74 per cent returns.

Valuation Methodology
 

Conclusion
The company is expecting its results for the financial year 2019 to be in line with market expectations. It is anticipating growth in the top line. The company is making progress across all the segments of its business. Its meals business has performed well in the second half of the fiscal year 2019. Its international business has delivered volume growth. The company is broadening its customer base which could benefit the growth of the company. However, fluctuation in the price and availability of raw materials, packaging materials and freight can impact the cost base and margin of the group, the threat of which has substantially risen in recent times due to various macropolitical headwinds. Brexit presents a risk as historically the group has employed a material number of citizens from elsewhere in the European Union and the company competes with other manufacturers for good and reliable employee. Therefore, manpower scarcity and higher labour costs could affect the business and future profitability.

Based on the valuation and factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of GBX 136.80 (as on 27th January 2020), with support from few catalysts needs to be evaluated at a later stage. 

 Schroder UK Public Private Trust Plc (LON: SUPP)

Business Overview
Schroder UK Public Private Trust Plc (London Stock Exchange-traded) is a closed-ended investment company. The group's operational activities are - investment in unquoted and quoted equities of companies listed or incorporated predominantly in the United Kingdom (UK).

Recent News
On 13^th December 2019, the company announced that Schroder Investment Management Limited ("Schroders") would be the new portfolio manager of the company with immediate effects. The company also announced that it has been renamed as Schroder UK Public Private Trust plc and the ordinary shares would now trade under the ticker "SUPP" with effect from 8:00am on Monday 16 December 2019.

Financial Highlights: H1 FY19 (period ended as on June 30, 2019)

(Source: Interim Report, Company Website)

In the first half under consideration, the group’s loss from investments and derivatives at fair value stood at GBP 229 million against a profit of GBP 6.86 million recorded a year-over period. Also, at the end of H1FY19, the group’s net assets plummeted 13.94 per cent to GBP 654 million against GBP 760 million reported a year-over period and Net Asset Value Per Share slumped 21.69 per cent to 72.0p from 91.94p reported a year-over period and declined 26.24 per cent from December 31, 2018 data.

Share Price Performance

Daily Chart as on 28^thJanuary 2020, before the market closed (Source: Thomson Reuters)

On January 28^th, 2020 Schroder UK Public Private Trust Plc shares were trading at GBX 32.95 at the time of writing before the market close (at 11:50 AM GMT), down by 0.15 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 87.93/GBX 28.05. The stock price has givennegative 61.55 per cent returns during the previous year. In the last one month, it has givennegative 15.51 per cent returns.

Conclusion
In the first half of the financial year 2019, the company witnessed a decline in its business performance. Its net assets had decreased. Its Net Asset Value (NAV) per share had been declining for some months. The group is undergoing through a crisis, invoked by the erstwhile portfolio manager, as their investments in unquoted investments went completely wrong for their flagship LG Income Focus Fund. Also, trust in the widely famous Neil Woodford has been jolted badly, after he put a restriction on withdrawal from his Income Focus Fund. The pain is deep, and it will take a considerable amount of time to recoup and re-position company in the UK's asset management industry. Also, its shares were dropping since past couple of months and could further continue with the prevailing trend.

Based on the above rationale, we recommend investors to “AVOID” taking fresh positions in the stock at the current price of GBX 33 (as on 28th January 2020, before the market close at 11:59 AM GMT).

*All forecasted figures and information have been taken from Thomson Reuters.

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