Man Group Plc

Man Group Plc (LON: EMG) is a financial services company providing portfolio solutions to the clients. The company is an investment management company which actively deploys the latest technologies to keep themselves in a leading position in the growing industry. 

Trading update for the third quarter (ended 30th September 2019)
On 11th October 2019, Man Group announced its trading update for the third quarter ending 30th September 2019. The company’s FUM (Funds under management) stood at $112.7 billion for the period as against FUM (Funds under management) of $114.4 billion as on 30th June 2019. The company witnessed $0.7 billion of Positive investment for the period. The Net outflows for the quarter stood at $1.1 billion, while FX impacted negatively by $1.3 billion for the period. The company with an annualised interest saving of nearly $4.5 million, redeemed Tier 2 notes of $150 million as on 16th September 2019. As announced in the financial year 2018, the company completed a share repurchase of $100 million, and the total repurchased amount was $0.7 billion since 2014. The company is actively looking forward to potential acquisition opportunities with an intention to repurchase nearly $100 million of shares. 

Share Price Performance

Daily Chart as of  January 14^th, 2020, before the market close (Source: Thomson Reuters)

Man Group Plc shares were trading at GBX 153.30 at the time of writing before the market close (at 8:24 AM GMT) on 14^th January 2020 and were up by 0.66% versus the previous day closing price. Stock's 52 weeks High is GBX 177.10 and Low is GBX 128.35.The shares of the company have delivered a positive return of 1.39 per cent in the last nine months. The company’s stock has given investors 2.29 per cent of a negative return in the last month.

Conclusion
The company reported a decent financial performance for the first half of the financial year 2019. The company’s top-line performance has improved for the period. The company has recently undergone a corporate reorganisation which will provide greater flexibility in terms of financing the business. The company operates in multiple geographies, which will help them to mitigate the risks faced from a particular location with the profits generated from the other location. The company would be impacted due to the uncertainty created due to the Brexit, as it would result in customer loss and negatively impact the financial performance of the company, even in the case of “No- Deal” Brexit.


Over the course of 5 years (FY13 - FY18), the company’s net income surged from USD 72 million in FY13 to USD 273 million in FY18. Compounded annual growth rate (CAGR) stood at 30.55 per cent.

Based on the above rationale, we have given a "HOLD" recommendation at the current price of GBX 152.30 (as on 14^th January 2020, before the market close at 8:30 AM GMT).

Velocys Plc

Velocys Plc (LON: VLS) is an oil equipment, services & distribution company with the expertise to commercialise fuel projects. The company also offer licenses to its technologies to other companies as well.

Financial Highlights – H1 Financial Year 2019 (30^th June 2019, GBP, thousand)

(Source: Interim Report, Company Website)
 
In the first half of the financial year 2019, the company’s revenue stood at GBP 22 thousand as against GBP 392 thousand in H1 FY2018. The decline in the revenue was due to the adoption of IFRS 15 as most of the revenue from Red Rock Biofuels (RRB) will be recognised in the future periods. In H1 FY2019, the gross profit stood at GBP 14 thousand versus GBP 111 thousand in H1 FY2018. The adjusted operating loss stood at GBP 5,218 thousand in H1 FY2019 versus an adjusted operating loss of GBP 11,005 thousand in H1 FY2018. The company’s loss before net financial income/costs stood at GBP 4,641 thousand in H1 FY2019 versus a loss before net financial income/costs of GBP 27,821 thousand in H1 FY2018. The company’s adjusted LBT (loss before tax) stood at GBP 5,198 thousand in H1 FY2019 as against an adjusted LBT (loss before tax) of GBP 9,894 thousand in H1 FY2018. The company’s reported LBT (loss before tax) stood at GBP 4,621 thousand in H1 FY2019 as against a reported LBT (loss before tax) of GBP 25,036 thousand in H1 FY2018. The company’s reported LAT (loss after tax) attributable to shareholders stood at GBP 4,335 thousand in H1 FY2019 versus a LAT (loss after tax) attributable to shareholders of GBP 24,866 thousand in H1 FY2018. The reported basic and diluted loss per share stood at 1.06 pence in H1 FY2019 as against a reported basic and diluted loss per share of 7.53 pence in H1 FY2018.

Share Price Performance

Daily Chart as of  January 14^th, 2020, before the market close (Source: Thomson Reuters)

Velocys Plc shares were trading at GBX 2.90 at the time of writing before the market close (at 8:26 AM GMT) on 14^th January 2020 and were up by 0.52% versus the previous day closing price. Stock's 52 weeks High is GBX 5.48 and Low is GBX 0.95.The shares of the company have delivered a positive return of 57.37 per cent in the last quarter. The company’s stock has given investors 21 per cent of a negative return in the last nine months.

Conclusion
The company has shown improvement in financial performance in the first half of the financial year 2019.Although the revenue has declined, the bottom-line has improved for the period. The company had managed to reduce its operating expenses, while the profitability remained in the negative zone for the period. The company operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of competitors. The company remained well-positioned with strong pipeline and order-book, which will help them to improve their performance in the long run.

Based on the above rationale, we recommend investors to keep a “Watch” on the stock at the current price of GBX 3.06 (as on 14^th January 2020, before the market close at 8:32 AM GMT), while we look for any upcoming catalysts.

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