Blue Prism Group Plc (LON: PRSM)

Business Overview
AIM-listed Blue Prism Group Plc is a Robotic Process Automation (RPA) provider, which enables a wide range of customers around the globe to intelligently automate their business processes, in order to cut costs by automating repetitive tasks and freeing up hours of work. The company’s operations are differentiated in three geographical segments: EMEA Operations, The Americas Operations and APAC Operations.

Recent News
On 23^rd January 2020, the company announced its full year results for the financial year 2019 ended on 31^st October 2019.

Financial Highlights – Financial year 2019 (31st October 2019, GBP, million)
 
(Source: Interim Report, Company Website)

In the fiscal year 2019, the company’s revenue grew by 83 per cent to GBP 101 million as compared to GBP 55.2 million reported last year, due to strong sales and upsell activities of the company. The monthly exit run rate (MRR) is the amount of recurring revenue at the last month of the reporting period. The metric, and its comparator, reflect the full month impact of revenues won during the last month of the period so that it accurately reflects the Group's progress. The MRR recognised as at 31 October 2019 increased by £4.4m to £10.6m (FY18: £6.2m). The company recorded a loss from operations for the period (including share-based payments) of £81.4m, compared to a loss of £26.0m in FY18. The increase primarily related to investment in the Group's international growth strategy, with significant investments in sales, marketing, product, professional services and underlying business infrastructure as outlined at the time of the equity fundraising in January 2019. The adjusted EBITDA loss was GBP 71.9 million against loss of GBP 21.6 million in FY2018. Net cash at the end of FY2019 was GBP 74.1 million versus GBP 50.5 million in FY2018.

Share Price Performance

Daily Chart as on 23^rdJanuary 2020, before the market closed (Source: Thomson Reuters)

On January 23^rd, 2020, Blue Prism Group Plc shares were trading at GBX 1,495 at the time of writing before the market close (at 11:07 AM GMT), up by 21.40 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 2,030/GBX 774.25. The stock price has given 28.87 per cent returns during the previous year. In the last three months, it has given a whopping 85.94 per cent returns.

Conclusion
In the financial year 2019, the company has delivered excellent financial performance. The company is facing some principal risks and uncertainties, which could impact the overall business of the company. Excessive dependence on channel partners, software reliability and performance, could affect the growth of the company. Market and technological changes could affect the business of the company. However, the company has surpassed the market expectations and delivered excellent financial as well as operational performance. Its customer base has been growing at a decent pace, and it has an encouraging upselling performance. The company closed the financial year ended 31 October 2019 with a significantly increased customer base of 1,677 customers. The company is making acquisitions which would boost its growth. The benefits of the 2019 investments would begin to come through during 2020 and the company is able to capitalise on this opportunity to grow its business. The company prospects look good, and it could provide an opportunity to invest for the long term.

The company’s revenue has grown almost ten times from GBP 9.6 million in FY2016 to GBP 101 million in FY 2019, delivering growth of 119 per cent on a CAGR basis.

Based on the above rationale, we have given a "HOLD" recommendation at the closing price of GBX 1,230 (as on 22nd January 2020).

Petropavlovsk Plc (LON: POG)

Business Overview
Petropavlovsk Plc is a London-registered Russian gold mining company with operations in the Far East of Russia, and in terms of production, reserves and resources, it is one of the major gold mining companies in Russia.
Recent News
On 23^rd January 2020, the company announced its Q4 and FY2019 sales and production report.
Q4 and FY2019 Sales and Production Statement

(Source: Interim Report, Company Website)

In the financial year 2019, the company’s gold sales increased by 39 per cent to 514,000 oz as compared to 369,800 oz in the fiscal year 2018 due to the processing of refractory concentrates in the first year of operations at the POX Hub. 471,600 oz of the total FY 2019 sales amount represented gold sold from the company's own mined production, an increase of 28 per cent on FY 2018 and in line with the company's guidance of 450 - 500koz. The average realised gold price was US$1,395/oz in Q4 FY2019 against US$1,244/oz in Q4 FY2018 and US$1,346/oz for the fiscal year 2019 versus US$1,263/oz in fiscal year 2018. In Q4 FY2019, the company’s gold sales increased to 162,600 oz as compared to 85,400 oz in Q4 FY2018.

Share Price Performance

Daily Chart as on 23^rdJanuary 2020, before the market closed (Source: Thomson Reuters)

On January 23^rd, 2020, Petropavlovsk Plc shares were trading at GBX 14.58 at the time of writing before the market close (at 11:38 AM GMT), up by 10.45 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 14.82/GBX 6.99. The stock price has given 96.76 per cent returns during the previous year. In the last three months, it has given a 53.15 per cent returns.

Conclusion
The company has witnessed a decent financial performance in the fiscal year 2019. There are some principal risks and uncertainties which could impact the overall business of the company. Operational risks arise due to weather conditions, failure in delivery of equipment, etc. could affect the operations of the company. Financial risks such as lack of funding and liquidity, fluctuations in gold price, foreign exchange rate fluctuations, etc. could affect the profitability and revenue of the company. The company’s POX Hub accounted for one third of gold sales in 2019 which showed its successful transition towards the growth of the company.  The POX plant has designed in the minimal time to reach its commissioning stage which demonstrates the quality of Petropavlovsk's engineering capabilities. The company is planning to increase its production which would grow its business. Its production is expected to be in the range of 620koz to 720koz for the next year. This would include the treatment of third-party concentrates. The POX plant has a high level of fixed costs, therefore, increasing throughput would counter the cost issue and help in reducing cash costs per ounce which would provide additional cash generation from the business.  The construction of a new flotation plant at Pioneer is expected to operate from Q4 2020. The company is taking care in ensuring quality of design and construction of its facilities by carrying out detailed audits of the facilities. The company is gaining focus from investors on its tailings storage facilities. The company prospects look good and it could provide an excellent opportunity to invest for the long term.

Based on the above rationale, we have given a "HOLD" recommendation at the closing price of GBX 13.20 (as on 22nd January 2020).

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