ITV Plc

London, United Kingdom-based ITV PLC (ITV) is an IPB (integrated producer broadcaster) company. The company's operations are differentiated in two segments: Broadcast & Online and ITV Studios.

Recent News
On 3^rd April 2020, the company announced several measures to reduce its costs and manage its cash flow in response to the COVID-19 pandemic. The Group had cancelled annual Bonus for its executive Directors.

Trading Update (23^rd March 2020)
For the financial year 2020, the company is expecting 1% decline in total advertising revenue and profit by c.£17 million, before any mitigation. The Group has reduced its programme budget by at least £100m. It has also reduced its discretionary spending by £20m in 2020. It has withdrawn its market guidance for 2020. The Group had ceased its dividend for FY2020 and holding £150m of unrestricted cash.

Financial Highlights – Financial Year 2019

(Source: Annual Report, Company Website)
 
In FY19, the company’s total revenue increased by 3 per cent to £3,885 million as compared with the corresponding period of the last year, due to an increase in the total Studios revenue of 9 per cent. Total external revenue increased by 3 per cent to £3,308 million against the £3,211 million in FY18. Adjusted EBITA was down by 10 per cent to £729 million as compared with the same period in 2018. Adjusted EPS stood at 13.9 pence, a decrease of 10 per cent against the 15.4 pence in H1 FY18.

Share Price Performance  

Daily Chart as on 3^rd April 2020, after the market closed (Source: Thomson Reuters)

On April 3, 2020, at the time of writing (after the market close), ITV Plc shareswere closed at GBX 54.42. Stock’s 52 weeks High and Low are GBX 165.90/GBX 50.06. 

Valuation Methodology

*Peers: STV Group Plc, Publicis Groupe SA, Proslebensat 1 Medai SE and Impresa Sociedade Gestora SA.

Conclusion
The company has a decent balance sheet which remains robust in the current challenging times. It had delivered returns to investors in line with the fiscal year 2019 guidance. For the full year 2019, ITV revenue growth stood at 3 per cent. Total advertising revenue was down by around 1.5 per cent, and cost programme is on track to deliver savings of £20 million.

In the second half of 2019, the phasing of deliveries will adversely affect ITV Studios' performance in the year 2020. The company expected double?digit revenue growth in Direct to Consumer and revenue growth in Online.

In the media market, the company operates in a very dynamic environment. It is evolving, changing rapidly and becoming progressively competitive.  An economic downturn could affect the demand for Radio and TV Broadcasters, and the media is exposed to global political and economic events and trends, leading to a risk to business operations from external factors. In the financial year 2020, the company expected another challenging operating environment due to the recent outbreak of Coronavirus.

Based on the risks factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of GBX 54.42 (as on 3rd April 2020, after the market close), with support from few catalysts needs to be evaluated at a later stage.
 

G4S Plc

G4S Plc (LON: GFS) is a globally integrated security company. The group provides security guards, alarms, monitoring, management and the transportation of valuables and currencies. 

The group will release its Q1 Trading Update in May 2020.


Covid-19 Update
On 23^rd March 2020, G4S released an update on the impact of coronavirus on the performance of operations. On 11^th March 2020, the group in its preliminary results for the financial year 2019 announced that Covid-19 outbreak doesn’t have a material impact on the year-to-date performance. After 11^th March 2020, the spread of the virus has been accelerated outside the Asian region and was declared as a global pandemic by the World Health Organisation. The national governments have taken multiple measures to contain the spreading of virus and have resulted in a lower level of economic activity across geographic markets and business sectors. The group remained focused on ensuring the health and safety of its stakeholders and protect its business. The company is working in sync with suppliers, employees, customers, governments and regulators. As on 31^st December 2019, the group’s liquidity stood at GBP 1.3 billion including cash balances, bank overdraft and credit facilities. The company has loan notes and gross outstanding bank loans of GBP 2.3 billion in the financial year 2019 and GBP 56 million is scheduled for 2020 repayment. The group agreed on the sales of its conventional cash businesses for an enterprise value of GBP 727 million to The Brink’s Company on 26^th February 2020. The board believe that post 11^th March uncertainty relating to Covid-19 outbreak and impact on economic activity has increased and will impact the company’s key markets. The group’s robust business continuity plans and decent liquidity will help the company to tackle the uncertain period. Looking at the present situation, the group has decided not to pay a final dividend in 2019.

Share Price Performance

Daily Chart as of April 3^rd, 2020, after the market close (Source: Thomson Reuters)

G4S Plc shares were trading at GBX 69.92 at the time of writing after the market close on 3^rd April 2020. Stock's 52 weeks High is GBX 241.80 and Low is GBX 69.92. 
 
Conclusion
The company operates in a changing and transformative environment, which could affect the business of the Group. The inability of product innovation could affect the revenue of the company. Failure in information security and fluctuation in foreign exchange rates could affect the revenue as well as the profitability of the G4S. The group announced that Covid-19 outbreak doesn’t have a material impact on the year-to-date performance till 11^th March 2020. After 11^th March 2020, the spread of the virus has been accelerated outside the Asian region and actions taken to contain the virus resulted in an economic slowdown and will impact the company’s operations. The group’s robust business continuity plans and strong liquidity will help the company to tackle the uncertain period.

Therefore, based on the above rationale and uncertainties in near-term due to Covid-19 pandemic, we have given a “Watch” recommendation at the closing price of GBX 69.92 (as on 3^rd April 2020), while we look for any upcoming catalysts in the near term.
 
*All forecasted figures and information have been taken from Thomson Reuters. 

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