Business Overview
Go-Ahead Group Plc (LON: GOG) is the public passenger transport company for bus and rail services. Its areas of operation are divided into three segments, i.e. regional bus, London bus and rail.

Recent News
On 16^th December 2019, the company announced that Computershare Trustees (Jersey) Limited had purchased 4,246 ordinary shares of 10p each in the company at an average share price of GBP 21.42. The Trust now holds 155,029 ordinary shares representing 0.3591 per cent of the company's current voting rights.

Trading Update (for the period from 30^th June 2019 to 27^th November 2019)
On Year to Date (YTD) basis, the company’s like for like revenue increased by 2.5 per cent and passenger journey also increased by 0.5 per cent in the regional bus. In London and international bus, the revenue increased by 8 per cent, mileage increased by 4 per cent, and peak vehicle requirement (PVR) increased by 4.5 per cent at YTD like for like basis. Robust revenue growth reflects the launch of new contracts in London. This business continues to deliver robust performance with high punctuality levels. Operations in Ireland and Singapore continue to perform well and in line with anticipations. For the rail division, the overall expectations remain unchanged, with a decent performance in the United Kingdom offsetting a challenging operational start to the two new German rail contracts. In GTR (Govia Thameslink Railway), the company’s operational performance continues to benefit from the substantial enhancements delivered over the past eighteen months, and the franchise is now contributing to the company’s profitability. The introduction of the new fleet including 1,500 carriages, was completed in October 2019.

The company will announce its half year results on 12^th March 2020.

Share Price Performance

Daily Chart as on 11^thFebruary 2020, before the market closed (Source: Thomson Reuters)

On February 11^th, 2020, Go-Ahead Group Plc shares were trading at GBX 2,164 at the time of writing before the market close (at 8:13 AM GMT), up by 2.08 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 2,308.91/GBX 1,773. The stock price has given18.24 per cent returns during the previous year. In the last three months the stock price has given 4.26 per cent returns.

Valuation Methodology

*Peers: Royal Mail Plc, Air Partner Plc, FirstGroup Plc, Dart Group Plc, Stagecoach Group Plc, Easyjet Plc, National Express Group Plc and Wizz Air Holdings Plc

Conclusion
The addition of the new bus company in Manchester, combined with cost pressures in several regions of the business, has marginally lowered the anticipations for the bus division’s financial performance for the full year. Since the launching of the capped payment scheme in September 2019, the number of journeys paid for using this method has increased to 25% of all on-bus transactions. In October, GTR division completed the opening of its 717 trains of new fleet delivering greater capacity and reliability to the passengers with new carriages of 1,500 brought into service since 2014. Despite decent growth recorded in the latest period, the group is substantially exposed to the Brexit related uncertainties like disruption in supply chain, fear of losing access to the single market of the EU bloc and as group’s revenue majorly comes from the European market, a plunge in pound against the US dollar could also dent its performance in future. The company also offers a platform to explore additional prospects in several regions.

Based on the valuation and factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the current price of GBX 2,164 (as on 11th February 2020 before the market close at 8:13 AM GMT), with support from few catalysts needs to be evaluated at a later stage. 
 
*All forecasted figures and information have been taken from Thomson Reuters.

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