GlobalData PLC

GlobalData PLC (LON: DATA) is a FTSE AIM 100 quoted Company, which provides market data intelligence services. It has been serving over 4,000 clients, including Companies across various industries, financial institutions, government organizations and professional service firms.

Rationale for Valuation – SPECULATIVE BUY at GBX 1,345.00

• Growth Prospects: The introduction of single Platform operating model is likely to accelerate organic and inorganic growth opportunities.
• Acquisition: The recent acquisition of Life Sciences business of IHS Markit Ltd (announced on 09 September 2021) shall strengthen pharmaceuticals data, insights, and analytics services.
• Solid Fundamentals: During H1 FY21, the Company delivered a strong financial performance as the Company maintained its business as usual throughout the year. Moreover, the attractiveness of the information services has given them the potential of delivering strong financial and operating performance in H2 FY21 as well.
• Technical Indicator: From a technical standpoint, 14-day RSI (~39.55) is in the oversold territory, while the stock price is hovering close to the lower standard deviation of the Bollinger Band.
• Better Profitability: Over the last two interim results, GlobalData has maintained significantly higher profitability margins, as EBITDA margin and net margin remained higher than the industry median of 19.6% and 8.1%, respectively.

Key Risks

• Pandemic Induced Restrictions: Due to the resurgence of the pandemic, travel restrictions can have an impact on new business and pipeline opportunities.
• Macroeconomic uncertainty: British inflation rose to its highest in 10 years, while the strengthening of US Dollar with an increase in US Treasury Yields can hinder the Company’s growth prospects.
  

Financial Highlights for the six months ended 30 June 2021 (as on 26 July 2021)

 (Source: Company Website)

• Revenue and Operational Growth: During H1 FY21, underlying revenue and adjusted EBITDA surged 8% and 17% year-on-year, respectively. The growth was supported by the solid growth in subscription revenue.
• Profit Growth: The profit before tax increased to £16.0 million in H1 FY21 (H1 FY20: £9.3 million), reflecting a 72% year-on-year increase.
• Strong Cash Conversion: The cash from operations remained flat at £40.8 million in H1 FY21, represented 133% of Adjusted EBITDA.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis done by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY21) (Illustrative) 

 Conclusion 

During H1 FY21, GlobalData demonstrated continued margin enhancement and solid underlying performance. Subsequently, there was a 13% increase in interim dividend. In the near-term, the Group is targeting to achieve at least 10% annual organic growth and an Adjusted EBITDA margin of 35-40%. The stock made a 52-week High and Low of GBX 1,700.00 and GBX 1,100.00, respectively.

Based on the strong trading, revenue guidance, accelerated growth strategy, and favourable valuation conducted above, we have given a “SPECULATIVE BUY” stance on GlobalData PLC at the current price of GBX 1,345.00 (as on 9 November 2021, at 8:39 AM GMT), with lower double-digit upside potential based on 51.27x Price/NTM Earnings (approx.) on FY21E earnings per share (approx.).

Tpximpact Holdings PLC

Tpximpact Holdings PLC (LON: TPX) is a FTSE AIM All-Share listed digital transformation service provider to the UK public services sector.

Investment Rationale – SELL at GBX 274.00

• Profit Booking: TPX is giving an incredible opportunity to book profit amid rising market uncertainties, since it has given a scintillating return of around 140% in the past year.
• Small Market Capitalisation: TPX is a penny stock with small market capitalization, and it is quite exposed to the market volatilities.
• Macroeconomic Uncertainties: The inflationary market conditions, China demand concerns, and other macroeconomic uncertainties can impact the customer and investor sentiments in the short-term.
• Technical Indicator: From a technical standpoint, 14-day RSI (~73.53) is in the overbought territory, while the stock price is hovering close to the upper standard deviation of the Bollinger Band.
• Overvalued Multiples: On forward 12-month basis - EV/EBITDA, and Price/Earnings, valuation multiples are quite overvalued against the corresponding multiples of Software & IT services industry. Even the dividend yield is lesser than the industry median.

Risk Assessments

• Macroeconomic Risk: The strengthening of the US Dollar and rising US Treasury Bond Yield can cause exchange rate risk.
• Restricted Market: The travel restrictions can have an impact on new business and pipeline opportunities.

Recent News

Change of Name and Website: On 1 October 2021, the Completed the change of its name to TPXimpact Holdings PLC (previously The Panoply).

Trading Update (for the five-month period from 1 April 2021 to 1 September 2021, as on 15 September 2021)

• Strong Trading: TPX reported strong trading in the above-mentioned period and won new contracts of approximately £50 million.
• New Contracts: The utilities sector represented a significant win of £10.0 million in value for over five years.
• Guidance: For FY22, organic revenue growth is expected to between be 15-20%, while the total revenue for FY22 shall be in the excess of £77 million.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY22) (Illustrative) 

 Conclusion

TPX has yielded a return of around 140% in the past year. Therefore, it is rational to book profit at the current levels, while the markets are hit by concerns about subdued Chinese demand data. The risk appetite of investors can remain dampened with rising inflationary pressure, supply chain snags and resurgence of Covid-19 cases. The overall demand contraction can derail the economic recovery and put pressure on customer sentiments as well. The stock made a 52-week high and low of GBX 325.00 and GBX 105.75, respectively.

Based on the strong trading, significant order intake growth, high demand, raised guidance, and, supported by the valuation conducted above, we have given a “SPECULATIVE BUY” recommendation on Tpximpact Holdings PLC at the current market price of GBX 274.00 (as on 9 November 2021, at 9:04 AM GMT), while we look forward to reinvesting the capital plus gains when short-term uncertainties fade away.  

*All forecasted figures and Industry Information have been taken from REFINITIV.

*Dividend Yield may vary as per the stock price movement.

*The reference data in this report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level (indicative stop-loss price).

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