IWG Plc (LON: IWG) workspace company with Global Presence

IWG Plc is a co-work and workspace company based out of Switzerland with a global presence. The company  helps over 2.5 million people and their occupation to work more productively. 

Recent News
The group will provide Q1 trading update (as earlier stated date of 28^th April 2020) on 28^th May 2020 and will be covering 4 month period ending 30^th April 2020.

Covid-19 Update and Response taken by Management
On 23^rd March 2020, IWG released an update on the impact of the covid-19 outbreak on business performance. The group reported decent revenue and profit growth in the financial year 2019 and carried same momentum in the month of January and February. In the beginning of year, coronavirus impacted the Chinese operations, which are now restored to full capacity. Now the group has experienced disruptions in its global business after the lockdowns imposed by the governments of different regions. The group has been constantly monitoring the situation and has taken required steps to limit capital expenditure, optimise cash flows and reduce operational costs. The company has decided not to pay dividends until the situation gets normal and has temporarily suspend the share repurchase programme for GBP 100 million. The group has a strong balance sheet with adequate liquidity and low financial leverage. IWG has an RCF (Revolving Credit Facility) of GBP 950 million as on 9^th March 2020. At present, the company is unable to quantify the impact of the outbreak and imposed lockdowns and will provide an update once the situation stabilises. The group is focused on ensuring the health and well-being of its employees, partners, and customers.

Share Price Performance

Daily Chart as of April 24^th, 2020, before the market close (Source: Thomson Reuters)

IWG Plc shares were trading at GBX 209.40 at the time of writing before the market close (at 2:01 PM GMT) on 24^th April 2020 and up by 1.26% versus the previous day closing price. Stock's 52 weeks High is GBX 470.40 and Low is GBX 101.15.

Valuation Methodology

*Peers: HomeServe Plc, Rentokil Initial Plc, Hays Plc, and Intertek Group Plc.

Growth Catalysts
The Group is witnessing a strong demand globally and attracting more partners to the business. As organisations increasingly searching ways to face the issue of climate change and other environment challenges, the company expects that this would increase the importance of role to be played by remote, distributed, and flexible working strategies.

Conclusion
IWG is a leading global player in the Co-working space arena. Since 2013, the group has consistently maintained an EBITDA margin above 15%. The strong addition of new centres indicates the company’s strong focus on prudent capital allocation, and this has allowed them to maintain a robust financial position. The group expects the positive momentum to continue in its business operations, despite global, political, and economic uncertainty. The Group is focussed on developing its network and its services to ensure its market-leading position in the industry. At the beginning of FY2020, the group’s Chinese operations were impacted by the outbreak of Covid-19, which are now fully operational. The group is now facing the impact of the outbreak on its global operations and have been taking all required steps to tackle the uncertain situation.


Based on the decent prospects and support from the valuation as done using the above method, we have given a “BUY” recommendation at the current price of GBX 196.10 (as on 24^th April 2020, before the market close at 9:40 AM GMT) with single-digit upside potential based on 5.60x NTM Price/Cash Flow (approx.) on FY20E cash flow per share (approx.).

Dart Group Plc (LON: DTG) an award-winning airline

Dart Group Plc is an aviation and distribution company, headquartered in Leeds, United Kingdom. The company’s businesses are differentiated in two operating segments: Leisure Travel, which includes Jet2.com and Jet2holidays, and Distribution & Logistics, which includes Fowler Welch.

Trading Update with Decent Growth outlook (24^th April 2020)
On 24^th April 2020, Dart Group released an update on the trading performance. The group expect its adjusted Profit before tax and foreign exchange revaluation to be in between GBP 265 million to GBP 270 million in FY 2020 ending 31^st March 2020, reflecting an increase of around 49 per cent. The company’s Jet2holidays and the Jet2.com will begin sale from 17th June 2020 and estimated netexceptional charge of around GBP 109 million,after restarting the holiday flights. After travel restrictions imposed by the government, Jet2.com suspended its flying programme in the month of March and its Leisure Travel business witnessed growth in the passengers by 14 per cent to 14.6 million with growth of 19 per cent to 3.8 million in Package Holiday customers. The group has been taking measures to preserve the cash and increase the business stability. As the company’s aircraft fleet are grounded, its 80 per cent (approximately) employees based out of UK are on temporary leaves to make full use of the Coronavirus Job Retention Scheme launched by the UK Government, and same practise is followed by other employees from overseas operations. Dart Group will operate at reduced scale from 17^th June 2020 and cancelled all 12 summer-only leased aircraft. The company has stopped all its capital expenditure spending and are in talks with suppliers to reduce monthly outgoings. The group’s asked its employees to take reduced salaries from 1^st April 2020 to 30^th September 2020, as salary bill remained the largest portion of overall costs. The company will not be paying any performance bonus and will not be paying any dividend. The company has fully utilised its Revolving Credit Facility of GBP 100 million and begun the procedure to access Bank of England’s Covid Corporate Financing Facility. The group is in discussions with the existing liquidity providers for additional liquidity. The company witnessed increased bookings for late summer and winter and expect its Distribution & Logistics business to perform well despite the uncertain situation. The group expect increase in the bookings once the situation gets normal.

Share Price Performance

Daily Chart as of April 24^th, 2020, before the market close (Source: Thomson Reuters)
 
Dart Group Plc shares were trading at GBX 592.80 at the time of writing before the market close (at 2:10 PM GMT) on 24^th April 2020 and down by 3.14% versus the previous day closing price. Stock's 52 weeks High is GBX 1,950.00 and Low is GBX 182.50.

Valuation Methodology

*Peers: Gama Aviation Plc, Air Partner Plc, National Express Group Plc and John Menzies Plc.

Key Risks
Inherent threats to cybersecurity and information governance stay significant and dynamic. Macro external factors such as political and economic disruption, the emerging risk of infectious diseases, actual or threatened acts of terrorism or war, natural or man-made disasters could have an impact on the ability to perform and grow.

Conclusion
In the financial year 2020, the group has shown decent financial performance with an increase in the number of bookings. With the outbreak of Covid-19 and travel restrictions imposed by the government to contain the virus resulted in a sharp decline in the operational performance of the company. Approximately 80 per cent of its employees in the UK are on temporary leaves to make full use of the Coronavirus Job Retention Scheme, and the same practice is followed by other employees from overseas operations. The group has fully utilised its Revolving Credit Facility and is in discussions with the liquidity providers for additional funds. The company has begun the procedure to access the Covid Corporate Financing Facility launched by the Bank ofEngland. The group has decided not to pay any dividend and performance bonuses until the situation gets normal.

Based on the headwinds faced by the group, we have given a "WATCH" recommendation at the closing price of GBX 612 (as on 23^rd April 2020), while we look for any upcoming catalysts in the near term.

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

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