Business Overview
McBride Plc (LON: MCB) is a Household Goods company, providing personal care products and private label household. The company develop, produce and supply its production to Europe based retailers. The company’s brand portfolio includes Ovenpride, Limelite, McBride Direct, Clean and Fresh and Surcare.

Financial Highlights – H1 Financial Year 2020 (31^st December 2019, GBP, million)

(Source: Interim Report, Company Website)
 
In the first half of the financial year 2020, driven by decline in the household revenue, the company’s revenue (continuing operations) declined by 5.1 per cent to GBP 350.4 million versus 369.2 million in H1 FY2019. The total revenue declined by 10.4 per cent from GBP 391.1 million in H1 FY2019 to GBP 350.4 million in H1 FY2020. The adjusted operating profit (continuing operations) was down by 31 per cent to GBP 11.6 million in H1 FY2020 from GBP 16.8 million in H1 FY2019. The adjusted operating profit (total operations) was down by 29.7 per cent to GBP 11.6 million in H1 FY2020 from GBP 16.5 million in H1 FY2019. The operating profit (total operations) declined by 39.3 per cent from GBP 13.5 million in H1 FY2019 to GBP 8.2 million in H1 FY2020. The adjusted PBT (Profit before tax) from total operations was down by 31.7 per cent to GBP 9.7 million in H1 FY2020 from GBP 14.2 million in H1 FY2019. The PBT (Profit before tax) from total operations was down by 43.8 per cent to GBP 6.3 million in H1 FY2020 from GBP 11.2 million in H1 FY2019. The adjusted diluted earnings per share (total operations) stood at 3.7 pence in H1 FY2020 versus 5.5 pence in H1 FY2019, reflecting a decline of 32.7 per cent for the period.

Share Price Performance

Daily Chart as of February 20^th, 2020, before the market close (Source: Thomson Reuters)

McBride Plc shares were trading at GBX 64.4 at the time of writing before the market close (at 2:33 PM GMT) on 20^th February 2020 and were down by 2.42% versus the previous day closing price. Stock's 52 weeks High is GBX 126.96 and Low is GBX 44.71. The shares of the company have delivered a negative return of 17.12 per cent in the last three months.

Valuation Methodology

*Peers: Premier Foods Plc, Innovaderma Plc, Accrol Group Holdings Plc, Bakkavor Group Plc and Venture Life Group Plc.

Key Risks
The market conditions in which the company operates is full of challenges and might impact the operation performance and reduce financial performance as well. The launching of new operations might increase the regulatory risks for the company.Liquidity and interest rate risks which could affect the operations of the company. Any change in the spending pattern of customers might hamper the financial performance of the company. The company’s revenue is impacted by increased competition in the healthcare sector.

Conclusion
The company has delivered a weak financial performance in the first half of the financial year 2020. However, the company’s South, East and Asian geographies business have performed well in the half-year, reporting growth compared to the same period last year of 15.7 per cent, 1.6 per cent and 10.7 per cent respectively. The company’s overall revenue has declined. The company has lowered the full-year growth expectations. Logistics cost of the company is increasing. The company is facing Brexit uncertainty which could affect its operations. Adverse economic conditions could impact the revenue and profitability of the company.

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 66.00 (as on 19^th February 2020), with support from few catalysts needs to be evaluated at a later stage. 

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

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