Ascential PLC

Ascential PLC (LON: ASCL) is a London-headquartered specialist, global information company. The operations of the company are differentiated in four operating segments, namely Marketing, Sales, Product Design, and Built Environment & Policy.

On 2^nd April 2020,Edge by Ascential had launched a new product on Amazon, and the new version will offer better data and performance tracking.

Cannes Lions Cancellation & actions taken to tackle Covid-19
On 3^rd April 2020, Ascential announced the cancellation of Cannes Lions Festival and measures taken by the company to tackle the Covid-19. The Covid-19 outbreak continues to spread further, and its impact is felt across the globe by consumers across multiple industries including media, creative and marketing. The group witnessed that its customers shifted their priorities, and the group is focused on ensuring the health and safety of its people, partners and customers. Looking at the present situation the group has decided to cancel the Cannes Lions Festival, including the Awards in the year 2020. The Cannes Lions Festivals’ next edition will take place in June 2021, and the group is looking forward to welcoming creative industries and top brands. The group’s Marketing Segment in the year 2019 generated more than half of its revenue from the Cannes Lions Festival and associated regional events. The company is working with its suppliers and partners to reduce irrecoverable costs for 2020 festival. The board has decided not to pay the final dividend for the financial year 2019 of 4 pence per share announced in the month February 2020 and will allow the group to save GBP 15 million. The board has also suspended previously proposed salary increases for 2020 and temporarily reduced 25 per cent of salaries and fees of Executive Director and Non-Executive Director. The company has a strong balance sheet with adequate liquidity and refinanced its debt facilities in the month of January 2020.

Share Price Performance

Daily Chart as of April6^th, 2020, after the market close (Source: Thomson Reuters)

Ascential Plc shares were trading at GBX 176.50 at the time of writing after the market close on 6^th April 2020. Stock's 52 weeks High is GBX 426.40 and Low is GBX 173.80.

Valuation Methodology

*Peers: Informa Plc, Pearson Plc, Auto Trader Group Plc and Daily Mail and General Trust Plc.

Key Risks
The company has notedthat political and regulatory changes may disrupt patterns of trade, impose operating inefficiencies, while any severe recession or downturn could lead to reduced customer demand for its products and services.

Conclusion
In the financial year 2019, the group delivered decent organic revenue and adjusted EBITDA growth. Reduction in market share and revenue could be faced due to increased competition. Due to the rapid spread of Covid-19 globally, the company decided to cancel the Cannes Lions Festival. In the year 2019,the Cannes Lions Festival was the main source of revenue for the company’s Marketing Segment. The group isworking with its suppliers and partners to lower the irrecoverable costs related to 2020 festival. The group based on its robust balance sheet and adequate liquidity will able to face the challenging period.

Based on the headwinds faced by the group and uncertainties in near-term due to Covid-19 pandemic, we have given a "WATCH" recommendation at the closing price of GBX 176.50 (as on 6th April 2020), while we look for any upcoming catalysts in the near term.

Be Heard Group PLC

Be Heard Group PLC (LON: BHRD) is a United Kingdom-based digital marketing company. It was earlier known as Mithril Capital Plc. The company is having 330 specialists from media, tech, data & creative. The group focuses on building a network of digital companies spanning the e-commerce, marketing services, and technology sectors across the UK, the US and Europe.

On 15^th May 2020, the group will announce its full year results for FY2019.

COVID-19 Update (as on 6^th April 2020)
The company announced the update regarding the Covid-19 pandemic, which includes the protection of its employees and mitigate risks of business operations. Due to COVID-19, the group would face an adverse impact on the demand and supply of both international and national economies. The management has implemented several contingency plans to ensure that the group is able to protect the well-being of the employees and, moreover, continue to serve the broad and diverse client base. The company started the year well and was line with the Board's anticipations, however, the government measures to prevent the spread of the Covid-19 virus is now affecting the upcoming guidance. It has also withdrawn financial guidance. Ongoing uncertainty caused by Covid-19, the company is planning for cost reduction to preserve cash in the business. On 31^st March 2020, the company had net cash of around £2.4 million and has access to a 2 million pounds RCF (Revolving Credit Facility) from Barclays.

Share Price Performance

Daily Chart as of April6^th, 2020, after the market close (Source: Thomson Reuters)

On April 06, 2020, Be Heard Group Plc shares closed at GBX 0.20 and remained the same against the previous day closing price. Stock's 52 weeks High and Low are GBX 1.24/GBX 0.15. The average traded volume for 5 days was up by 5.42 per cent as compared to 30 days average traded volume. The shares of the company have delivered a negative return of around 61.16 per cent in the last three months.

Key Risks
Being a digital marketing company, the BHRD needs to invest heavily in innovation and system maintenance and, any failure to do so will impact the brand royalty and may affect the company’s financial performance. The company’s operations can be affected negatively due to ongoing uncertainties caused by COVID-19, as it would disturb the supply chain. As the company operates in multiple geographies, its profits can be impacted negatively due to foreign exchange rate fluctuations.

Conclusion
The company is facing some principal risks and uncertainties, which could impact the overall business of the company. Excessive dependency on channel partners, software reliability and performance, could affect the growth of the company. The company is making acquisitions which would boost or decline its growth.

Presently, the United Kingdom is facing the biggest slowdown in productivity. The company’s profitability remained in the negative zone in the first half of 2019.Being a media company, BHRD needs to invest heavily in innovation and system maintenance and, any failure to do so will impact the brand royalty and may affect the company’s financial performance.

The company was impacted by the challenging environment driven by heightened compliance, regulatory demands in the gambling and digital marketing sectors and operational challenges in the current financial year. With the outbreak of Covid-19, many countries-imposed restrictions on travel and resulted in a sharp fall in the stock markets globally.

Keeping in mind the risks faced by the company, investors are recommended to “AVOID” taking fresh positions at the closing price of GBX 0.20 (as on 6th April 2020).
 
 
*All forecasted data and peer information have been taken from Thomson Reuters.

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