Arrow Global Group Plc

Arrow Global Group Plc (LON: ARW) is a United Kingdom-headquartered financial services company engaged in the business of providing financial services. 

The group will announce its Q1 FY2020 results on 14^th May 2020.

Recent News
On 31^st January 2020, Arrow Global had partnered to invest €200m in new Lisbon ‘Metropolis’ through their Norfin platform.

Financial Highlights – Financial Year 2019 (31^st December 2019, GBP, thousand)

(Source: Annual Report, Company Website)
 
For the financial year ending 31^st December 2019, driven by lower impairment gains on portfolio investments, the group’s total income from portfolio investment stood at GBP 244,766 thousand versus GBP 269,404 thousand in FY2018. The total income stood at GBP 339,518 thousand in the financial year 2019 versus GBP 361,796 thousand in FY2018. The operating profit stood at GBP 105,818 thousand in FY2019 versus an operating profit of GBP 106,783 thousand in the financial year 2018. Driven by lower financial costs for the period, the PBT (profit before tax) increased to GBP 51,320 thousand in FY2019 from GBP 39,991 thousand in FY2018. The group’s PAT (profit after tax) stood at GBP 37,287 thousand in FY2019 versus GBP 29,969 thousand in FY2018. The basic earnings per share stood at 0.20 pence in FY2019 versus 0.17 pence in the financial year 2018. The diluted earnings per share stood at 0.19 pence in the financial year 2019 versus 0.17 pence in the financial year 2018.
 
Share Price Performance

Daily Chart as of March 27^th, 2020, before the market close (Source: Thomson Reuters)

Arrow Global Group Plc shares were trading at GBX 111.20 at the time of writing before the market close (at 9:11 AM GMT) on 27^th March 2020 and down by 16.39% versus the previous day closing price. Stock's 52 weeks High is GBX 306.80 and Low is GBX 60.00.

Conclusion
The company had shown a decline in the revenue in the financial year 2019.Despite the revenue decline,the bottom-line performance has improved for the period. The group has managed to control its operating and non-operating expenses. The returns in the investment business stay desirable, and cash generation and collections both surged decently. The company’s focus continues to be to build out fund management capabilities. Before the end of 2020, the company’s total FUM will be targeting €2.0 billion. Fundraising is vital for the growth of the company’s fund management capabilities and is crucial to the company's strategy to increase speed towards a more capital-light model. The group remained well-positioned to meet the needs in a fast-moving macro-economic environment. The group continue tomonitor the impact of Covid-19 and till now has no material impact on the operations.

Based on the decent growth prospects, we have given a “Speculative Buy” recommendation at the current price of GBX 97.50 (as on 27^th March 2020, before the market close at 10:58 AM GMT).

Amigo Holdings Plc

Amigo Holdings Plc (LON: AMGO) is a consumer finance group and is one of the largest providers of guarantor loan in the UK, which, through its subsidiaries, provides sales financing services.

The group will announce its full-year results in May 2020.
Covid-19 Trading Update
On 24^th March 2020, Amigo Holdings Plc released an update for trading and impact of Covid-19. To tackle the outbreak, the company has decided to pause activities related to new lending expect exceptional circumstances. The freed employees from lending activities will be shifted to other teams to increase the capacity and serve existing customers well. As per the advisory released by the UK government, many employees are working remotely from homes.

Financial Highlights – Nine Months Financial Year 2020 (31 December 2019, GBP, million)
In the nine months of the financial year 2020, the company’s revenue grew by 8.5 per cent to GBP 218 million as compared to GBP 201 million in the nine months of the fiscal year 2019. The number of customers increased by 18 per cent to GBP 232.1 thousand in nine months FY2020. Adjusted profit after tax declined 37.9 per cent to GBP 44.7 million in nine months FY2020 against GBP 72.0 million in nine months FY2019.

Share Price Performance

Daily Chart as of March 27^th, 2020, before the market close (Source: Thomson Reuters)

Amigo Holdings Plc shares were trading at GBX 18.8577 at the time of writing before the market close (at 9:13 AM GMT) on 27^th March 2020 and down by 1.47% versus the previous day closing price. Stock's 52 weeks High is GBX 297.50 and Low is GBX 10.48.

Conclusion
In the nine months of the fiscal year 2020, the company has shown a growth in revenue and number of customers. The group has not been able to control its operating and non-operating expenses for the period. It operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of competitors. The company's controlling shareholder’s willingness to sell its holding has resulted in the launch of a formal sale process and strategic review. The company’s operations are impacted negatively due to uncertainty created by the Brexit as it will result in an uncertain political and economic climate for short to medium term. The company has recently launched new operations in the new markets, which will increase regulatory risks and foreign exchange risks.

Therefore, based on the above rationale, we have given an “Avoid” recommendation at the current price of GBX 20.29 (as on 27th March 2020, before the market close at 8:07 AM GMT).

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