Business Overview
Vivo Energy PLC (LON: VVO) is engaged in the business of oil refining and markets under the brand of Shell to retail and commercial customers. The company distributes fuels, lubricants and liquefied petroleum gas (LPG).

Recent News
On 23rd January 2020, the company announced the appointment of Numis Securities Limited, as the company's joint corporate broker.

Trading Update - Q3 FY2019 (30^th September 2019, USD, million)

(Source: Interim Report, Company Website)

For the third quarter of 2019, the company’s sales volume increased by 15 per cent to 2,672 million litres as compared with the corresponding period of the last year, mainly driven by both the new contribution and robust Commercial performance in the Engen-branded markets. While the volume increased by 10 per cent to 7,657 million tonnes in the nine months period ended 30 September 2019 against the same period last year. The gross cash profit for the Q3 FY2019 grew by 13 per cent to $189 million against the $167 million in Q3 FY18. On a quarter-on-quarter basis, the company delivered a growth of 4 per cent in gross cash profit. For the nine-month period ended 30 September 2019, the gross cash profit surged by 6 per cent to $540 million. Gross cash unit margin of $71 per thousand litres in the Q3 FY2019 was ahead of the H1 FY2019. This was due to increased margins in the Shell-branded markets and broadly in-line with the prior-year period.

The company will announce its final results for FY2019 on 4^th March 2020.

Share Price Performance

Daily Chart as on 5^thFebruary 2020, before the market closed (Source: Thomson Reuters)

On February 5^th, 2020, Vivo Energy Plc shares were trading at GBX 113.80 at the time of writing before the market close (at 8:00 AM GMT), up by 2.15 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 144.70/GBX 104.20. The stock price has givennegative 13.78 per cent returns during the previous year. Now, some pull-back rally is expected in the stock price.

Conclusion
During the fiscal year 2019, the company expected volume growth, including the Engen-branded markets, to be within the guidance range of low to mid double-digit percentage growth. The company’s gross cash unit margin stays above the initial full-year 2019 anticipations and continues to anticipate being marginally ahead of preliminary guidance. From the above trading results, the company continue to anticipate another year of robust gross cash profit growth. Several initiatives are underway in order to drive growth in Retail volume. The company stay on track to attain the target of opening a net total in the range of 80-100 sites in 2019. The company has delivered a good result in Q3 FY19, with gross cash profit surged by 13% to $189 million against the same period last year. Led by the Engen-branded markets, the above results also show the strong volume growth of 15% year-on-year and stable margins in the Shell-branded markets. The company has done the completion of the roll-out of the ERP system across all 15 Shell-branded markets and the successful integration of the Engen transaction. The company is well-positioned to deliver against the anticipations for the full year.

The company’s gross profit has grown from $433.4 million in FY2015 to $624.4 million in FY2018, giving approximately 12.94 per cent growth on a CAGR basis.

Therefore, based on the above rationale, we have given a “Hold” recommendation at the closing price of GBX 111.40 (as on 4th February 2020).

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