SSP Group Plc

SSP Group Plc (LON: SSPG) is a food travel experts’ company. The company operates stores, lounges, cafes, restaurants, food courts and bars in travel locations such as train stations, motorway service stations, airports and other locations.
On 13^th May 2020, the group will release its next interim results.

Recent News
On 4^th March 2020, SSP America has launched three new restaurants, $590 million Terminal 3 Modernization Program, at Phoenix Sky Harbor International Airport.

Recent Updates (as on 26th February 2020)
On 26th February 2020, the company announced an update of the impact of the Coronavirus. In the current financial year trading, revenue from the UK, Europe and North America has been in line with the group’s expectations. These geographies contribute around 86 per cent of the group’s total revenue. In the Rest of the World, the company has witnessed an impact from the COVID-19 virus. In China, sharp declines in both domestic and international air passenger numbers were observed, which are currently running 90 per cent lower YOY. In other parts also, the number of passengers reduced on a YoY basis, ranging from 25 per cent to 70 per cent. The company expected 50 per cent lower sales on a YoY basis in the month of February across the Asia Pacific region. Overall, Group revenue in February is expected to reduce by approximately £10m - £12m, while the reduction in operating profit is expected to be approximately £4m - £5m.

Share Price Performance

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

SSP Group Plc shares were trading at GBX 217.50 at the time of writing before the market close (at 10:10 AM GMT) on 24^th March 2020 and up by 2.99% versus the previous day closing price. Stock's 52 weeks High is GBX 751.20 and Low is GBX 136.80.

Valuation Methodology

*Peers: Compass Group Plc, Restaurant Group Plc, TUI AG and Whitbread Plc.

Conclusion
The company do operate in a market full of economic and geopolitical uncertainties but is performing well based on cautious planning. Due to recent coronavirus outbreak, the company’s business has been affected. However, the Group is well placed to benefit from the significant structural growth opportunities in its markets over the medium term. For the full year 2020, the company’s expectation of being below 2% in like-for-like sales growth. The company’s anticipations for net gains for the full year 2019, including the acquisition, have surged to approximately 5%. The company also delivered an excellent start to the new financial year, with strong growth in revenue.

Based on the above rationale and the valuation done using the above method, we have given a “BUY” recommendation at the current price of GBX 196.80 (as on 24^th March 2020, before the market close at 8:10 AM GMT) with lower double-digit upside potential based on 8.00x NTM Price/Earnings (approx.) on FY20E earnings per share (approx.).
 

National Express Group Plc

National Express Group Plc (LON: NEX) is a Birmingham, United Kingdom-based transport provider delivering services company, which operates in the UK, North Africa, the Middle East, Continental Europe, and North America.

On 7^th May 2020, the group will release Q1 FY20 results.
On 27^th February 2020, National Express Group announced its vision for zero-emission. The Company will not buy any diesel bus for UK operations in future.

COVID-19 Update
On 19^th March 2020, National Express Group released an update on the impact of COVID-19 and actions taken by the management to tackle it. The group’s priority during the period is to protect its colleagues, businessand customerswhile following the advice and guidelines of the government.The group expect positive and small cash flow in the next few months based on contract structures and management actions. The group witnessed a decline in the passenger numbers and taking measures to protect cash flows and reduce its cost base. The company is working closely with local governments and contracting authorities to maintain some cash flows during the disruption period. In the first two months of FY2020, driven by an increase in the revenue from multiple businesses, the group’s revenue increased by 17 per cent versus the same period of FY2019. The group is focused on fixing its borrowing facilities of over GBP 1.3 billion and will reach this level in approximately the next 18 months period. The current undrawn committed facilities stood around GBP 500 million. The company is in talks with the banking group for short-term facilities if the market conditions worsen further.

Share Price Performance

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

National Express Group Plc shares were trading at GBX 112.00 at the time of writing before the market close (at 11:00 AM GMT) on 24^th March 2020 and up by 0.45% versus the previous day closing price. Stock's 52 weeks High is GBX 485.00 and Low is GBX 66.30.

Valuation Methodology

*Peers: Stagecoach Group Plc, Easyjet Plc and First Group Plc.

Conclusion
During the key summer period, the company has delivered another strong performance. ALSA is on-track, and the UK coach business increased too. ALSA is also driving operational excellence and providing a growth platform for the group. North America business had shown robust growth, boosted by consistent performance and the WeDriveU acquisition. The group recorded decent performance in the financial year 2019, driven by organic growth in all divisions, and the recorded performance was ahead of the group's expectations. The group’s performance was negatively impacted by the outbreak of COVID-19. To tackle the outbreak, the company is taking necessary actions to reduce its operating costs and is in talk with the banking group for short-term facilities if the market conditions worsen further.

Based on the above rationale and support from valuation done using the above method, we have given a “Buy” recommendation at the closing price of GBX 111.50 (as on 23^rd March 2020) with high single-digit upside potential based on 3.35x NTM Price/Earnings (approx.) on FY20E earnings per share (approx.).
 
 *The “Buy” recommendation is valid for the current price as covered in the report (as on 24^th March 2020).
*All forecasted figures and Peer information have been taken from Thomson Reuters.

Disclaimer

PLEASE BE ADVISED THAT YOUR CONTINUED USE OF THIS SITE OR THE INFORMATION PROVIDED HEREIN SHALL INDICATE YOUR CONSENT AND AGREEMENT TO THESE TERMS.
References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.
This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332.
The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine is not responsible for material posted on this website and does not guarantee the content, accuracy, or use of the content in this site. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated.
Kalkine do not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional licensed financial planner and adviser.