Wizz Air Holdings Plc

Wizz Air Holdings PLC (LON: WIZZ) is a Geneva, Switzerland-headquartered budget airline which is the largest low-cost airline in Eastern and Central Europe.

Trading Update Post COVID-19 outbreak (ending 31^st March 2020)
On 4th March 2020, Wizz Air Holdings released an update for trading ending 31st March 2020. After the outbreak of COVID-19, the demand for air travel in the European region impacted. The company made adjustments in its flight schedule travelling to Italian destinations between 11th March to 2nd April. With the aim to keep its customers safe and healthy, the company partnered with the relevant authorities and is strictly following guidelines set by EASA and WHO (World Health Organisation). The company is working with its suppliers to reduce cost, reducing overhead and discretionary spending and effective allocation of assets to maximise the company’s return. The group is considering adjusting network capacity in Q1 FY2021 in the magnitude of 10 per cent. The company is unable to predict the impact of the outbreak on its next year’s financial performance but remained confident of returning on track as the situation normalize.

Share Price Performance

Daily Chart as of March 4^th, 2020, before the market close (Source: Thomson Reuters)

Wizz Air Holdings Plc shares were trading at GBX 3,473.00 at the time of writing before the market close (at 1:42 PM GMT) on 4^th March 2020 and up by 2.60% versus the previous day closing price. Stock's 52 weeks High is GBX 4,526.00 and Low is GBX 2,794.00.

From the technical standpoint, its shares were trading below its short-term 30-day and 60-day simple moving average prices, which reflects a downtrend in the stock and carrying the potential to move down.

Valuation Methodology
 

*Peers: Stobart Group Ltd, Air Partner Plc, Wincanton Plc, Gama Aviation Plc and Globaltrans Investment Plc.

*Currency exchange rate taken for 1 USD = 0.77982 GBP.

Wizz Air Holdings Plc V/S FTSE Mid 250 Index

(Source: Thomson Reuters)
 
In the last two years, Wizz Air Holdings Plc share price has delivered 0.06 per cent return as compared to 1.56 per cent return of FTSE Mid 250 index, which shows that the stock has underperformed the index during the last five years.

Key Risks
The company’s operations are exposed to risks related to liquidity and funding, currency fluctuations and interest rate movements.A decline in demand for air travel may lead to excess capacity, adversely impacting the financials. 

Conclusion
The group operates in tough market conditions, and competition remains one of the key risks to the business and adversely affect revenues. Although the group’s financial performance has been impacted, due to outbreak of coronavirus as it resulted in a decline in demand.The company is facing emerging headwinds and cost pressures. The company is making necessary adjustments to face the outbreak and to maximise the return for the company. Wizz Air Holdings remained confident of returning on track as the situation normalize.

Based on the above rationale and risk associated, we recommend investors to keep a “Watch” on the stock at the current price of GBX 3,549.00 (as on 4^th March 2020, before the market close as at 11:35 AM GMT), with support from few catalysts needs to be evaluated at a later stage. 

Hill & Smith Holdings Plc

Hill & Smith Holdings PLC (LON: HILS) is an industrial engineering company supplying and manufacturing of galvanizing services and infrastructure products.

Solid Financial Performance for FY2019 (ending 31^st December 2019, GBP, million)

(Source: Interim Report, Company Website)
 
For the financial year ending 31^st December 2019, revenue surged by 8 per cent at constant currency basis to £694.7 million as against £637.9 million in FY2018. The company’s underlying operating profit increased by 6 per cent at constant currency basis to £86.3 million, which included a currency translation benefit of £1.4 million in the fiscal year 2019. The company’s reported operating profit increased by 6 per cent to £69.2 million in FY2019 as against £65.2 million in FY2018. The company’s reported profit before taxation increased to £61.8 million in FY2019 from £59.8 million in the FY2018. The company’s net debt was recorded at £215.3 million at 31st December 2019. The annual dividend of the company surged by 6 per cent to 33.6 pence per share in FY2019 as against 31.8 pence per share in FY2018.

Share Price Performance

Daily Chart as of March 4^th, 2020, before the market close (Source: Thomson Reuters)

Hill & Smith Holdings Plc shares were trading at GBX 1,454.00 at the time of writing before the market close (at 2:28 PM GMT) on 4^th March 2020 and up by 5.67% versus the previous day closing price. Stock's 52 weeks High is GBX 1,534.00 and Low is GBX 1,049.00.

From the technical standpoint, its shares were trading above its 60-day and 200-day simple moving average prices, which reflects an uptrend in the stock and carrying the potential to move up. The shares of the company have delivered a positive return of 9.32 per cent in the last quarter.

Conclusion
The company has delivered an improved performance in the current period. The company also delivered growth in both Top-line and Bottom-line in the current period. The solid presence in niche infrastructure markets is benefiting the company’s financial and operational performance, primarily in the US and UK. However, the company is dealing in an industry where competition and price pressure is very high; also, it varies from product to product and geographical market. Though, the group responds to the competition and pressure through the launch of new competitive product and strategical acquisitions.

The company is confident that the business model, financial strength position and market-leading positions indicate growth prospects for the company in the future. However, the short term macroeconomic and political uncertainties remain, particularly in the United Kingdom because of the Brexit.

Based on the above rationale, we have given a "HOLD" recommendation at the current price of GBX 1,344.00 (as on 4^th March 2020, before the market close at 8:00 AM GMT).
 
*All forecasted figures and Peer information have been taken from Thomson Reuters.

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