Business Overview
Stobart Group Ltd (LON: STOB) is London-headquartered aviation, energy and civil engineering company, which is engaged in infrastructure and support services business. Stobart Energy has contracts to supply biomass fuel to generate clean energy, while Stobart Rail & Civils provides innovative and efficient rail and non-rail civil engineering projects.

Recent News
On 16^th January 2020, the company delivers the following update in relation to the group’s investment in Connect Airways. For shareholders, the Connect Airways is made up of a consortium including Virgin Atlantic (30%), Stobart Group (30%), and Cyrus Capital (40%) that acquired the assets of Flybe. The shareholder consortium as to date provided funds of 110 million pounds to Connect Airways. Through a combination of cash and the sale of Stobart Air, its aircraft leasing business, Propius and Stobart Group's regional airline, the company (Stobart) has invested 45 million pounds.

Financial Highlights (for the six months ended 31st August 2019)
For the first half of 2020, the company’s reported revenue increased by 34.1% to £93.1 millionas compared with the corresponding period of the last year, due to an increase in aviation and energy division. The underlying EBITDA surged by 187.1% to £12.1 million against the same period last year, driven by an increase in two main operating divisions. The company has evaluated the substantial progress potential within its energy and aviation segments, and its available sources of investment funding. The group’s board continues to hold an 80 million pounds portfolio of non-strategic infrastructure assets. However, the company plans to dispose of these assets at the right time and in such a way that optimises the value to the group. The board’s objective is to restore the dividend at the point at which the company becomes substantially cash generative at an operating level, subject to an investment requirement to maximise investor returns.

Share Price Performance

Daily Chart as at February-04-20, before the market closed (Source: Thomson Reuters)

Stobart Group Ltd shares were trading at GBX 99.325 at the time of writing before the market close (at 1:40 PM GMT) on 4^th February 2020 and were down by 1.07% versus the previous day closing price. Stock 52 weeks High and Low are GBX 183.32/GBX 96.80. The group’s stock is reflecting the higher volatility as against the benchmark index based on the company’s beta of 1.32.

Conclusion
With Stobart Air and Propius, the combination of Flybe delivers the opportunity to determine a compelling proposal with a broad regional network in Ireland and the UK,whilst enabling the company to concentrate on its strategic emphasis for aviation services assets and developing the airport. For growth perspective, the investment will provide the potential at London Southend Airport, which is in turn owned by the company (Stobart Group).
The aviation and energy segments are generating exciting growth and require further investments in order to deliver their full potential.The company will deliver superior future returns. A significant impact on asset values and revenues can be made by external changes in the market and market confidence, not least from impact across the operations of the group because of Brexit, especially operational and commercial challenges for the airports. However, the company has undertaken several measures to prepare for the worst-case scenario, and it reported that planning and preparation work had been underway for some time. The company has shifted its focus entirely on airports and aviation series and energy business.

Based on the healthy prospects, we have given a "SPECULATIVE BUY" recommendation at the current price of GBX 96.40 (as on 4^th February 2020, before the market close at GMT 4:10 PM).

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