Pagegroup PLC

Addlestone, the United Kingdom-based Pagegroup PLC (PAGE) provides the recruitment consultancy and other ancillary services. The company’s business is differentiated in four segments: EMEA, United Kingdom, Asia Pacific and Americas. The company was earlier known as Michael Page International PLC.

On 14^th January 2020, the company will announce the Q4 FY2019 Trading Update.

Third Quarter 2019 Trading Update (as on 8^th October 2019)
In Q3 FY2019, the company’s reported sales increased by 4.2 per cent to £216.7 millionas compared with the corresponding period of the last year, due to an increase in the EMEA and Americas regions. While on a constant currency basis, the sales rose by 2.1 per cent from the previous year same period data. In H1 FY2019, the fee earner headcount decreased by 81 and surged by 46 in Q3 FY19. The company has total fee earners of 6,081 fee earners and a total headcount of 7,789. On 30^th September 2019, the net cash stood at £92 million, an increase from the previous quarter. On 9^th October 2019, the interim and special dividend paid was 17.03 pence per share or £54.5 million.

Financial Highlights (half-year results for the period ended 30 June 2019, £ million)

(Source: Interim Reports, Company Website)

For the first half of the financial year 2019, the company’s revenue surged by 9.2 per cent to £820.5 million from £751.6 million in the H1 FY2018. The increase in the revenue was driven by a strong geographical performance from EMEA, Americas, UK and Asia businesses for the period. The PBT (Profit before tax) increased by 10.9 per cent from £67.20 million in H1 FY2018 to £74.60 million in H1 FY2019. The company’s basic earnings per share surged by 8.4 per cent to 16.8 pence in H1 FY2019 from 15.5 pence in the H1 FY2018.

Share Price Performance

Daily Chart as at October-09-19, before the market closed (Source: Thomson Reuters)

On 9th October 2019, Pagegroup PLC shares were trading at GBX 362.60 at the time of writing before the market close (at 8:30 AM GMT), down by 1.414% against the previous day closing price. Stock's 52 weeks High and Low are GBX 557.88/GBX 356. The company’s stock beta was 0.80, reflecting the lower movement of the stock as compared to the benchmark index.

 Valuation Methodology


Conclusion
The company is continuously focusing on driving profitable progress with strategically investing towards its Vision of gross profit of £1 billion. For the financial year 2019, the operating profit will be in the range of £140–£150 million. The current macro-economic conditions are unfavourable due to the Brexit uncertainty.

The company has made further progress on the strategic transformation programmes, completing the network of regional shared service centres, three out of four of which are now on the new global financial system. The group is also making good progress on the transformation of the business technology function, which will standardise the systems globally and move them into the Cloud. Going forward, with investment across new technologies and plans for further expansion of the business, the company is well-positioned to achieve its mission or vision.

Based on the above factors and supported by valuation done using the above method, we have given a “Buy” recommendation at the current price of GBX 362.60 (as on 9th October 2019, before the market close) with single-digit upside potential, based on 11.35x NTM Price/Earnings multiple (approx.) on FY19E earnings per share (approx.).
 

Motif Bio PLC

London, United Kingdom-based Motif Bio PLC (MTFB) is a clinical-stage biopharmaceutical company. The company is focused on the development of antibiotics; its lead product candidate is iclaprim, which has a Qualified Infectious Disease Product (QIDP) designation from the FDA. The company develops drugs which are designed for the treatment of infections caused by multi-drug resistant bacteria.

Recent News
On 2^nd October 2019,the company announced that it has conditionally placed to raise gross proceeds of 600 thousand pounds (US$ 0.73 million).

Financial Highlights (for the six months June 30, 2019, US$ thousands)

(Source: Interim Reports, Company Fillings, LSE)

For the six months ended June 30, 2019, the net loss stood at US$6.2 million against the loss of US$7.8 million in H1 FY18. This led to a basic loss per share of $0.02, while diluted loss per share was $0.02. Cash and cash equivalents of approximately US$1.8 million was recorded as on June 30, 2019. As of September 30, 2019, Motif BioSciences Inc. had cash and cash equivalents of US$0.03 million. Two subsequent amendments to the agreement with Hercules were entered by the group and Hercules agreed to waive amortization payments. On September 19, 2019, Motif BioSciences Inc. met with the Food and Drug Administration to discuss a planned clinical study for the iclaprim product.

Share Price Performance

Daily Chart as at October-09-19, before the market closed (Source: Thomson Reuters)

On 9th October 2019, Motif Bio PLC shares were trading at GBX 0.6402 at the time of writing before the market close (at 10:51 AM GMT), down by 6.13% against the previous day closing price. Stock's 52 weeks High and Low are GBX 44.90/GBX 0.45. The company’s stock beta was negative 0.37, reflecting the negative movement of the stock as compared to the benchmark index.

Conclusion
There remains an urgent need for new antibiotics that can overcome resistant bacteria and is a critical healthcare issue that is recognized around the globe. The company is in a great position to capitalise on the opportunity presented by this pressing medical need as with the targeted Gram-positive spectrum of activity, and iclaprim has the potential to help address the problem.

While preparations for the European regulatory process are underway, securing approval for iclaprim in the U.S. remains the highest priority for the company. The company remained careful in managing its costs and continues to manage its resources to improve profitability aggressively.

The company will provide Hercules with a warrant option to subscribe for ordinary shares equivalent to 5 per cent of Motif Bio's share capital at an exercise price of 5 pence.With the accommodation from Hercules under the loan facility and other cash conservation initiatives, the company believe that they havesufficient cash to continue operations as of September 30, 2019.  However, the company will be required to seek additional capital funding in the immediate future and will provide further updates in due course.

Based on the above rationale, we have given a “SPECULATIVE BUY” recommendation at the current price of GBX 0.61 (as on 9th October 2019, before the market close, GMT 9:35 AM). 

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

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