Centrica Plc

Centrica Plc (LON: CNA) is a global energy solutions and services provider company, which concentrated on satisfying the changing needs of the clients and enabling the changeover to a lower-carbon future.

The group will release its AGM and Trading update on 11^th May 2020.

Trading Update
On 2^nd April 2020, Centrica released an update for trading and impact of Covid-19 on performance. The group is focused on ensuring the safety and wellbeing of its employees and customers. The company ensured the help to its customers from all communities and will be providing additional support to vulnerable customers. The group has been taking multiple actions to maintain a robust balance sheet with adequate liquidity to adjust expected working capital increase due to deferring payments from some customer segments. At this stage, the company is not able to quantify the impact of Covid-19 on its financial performance. The group has taken necessary decisions to reduce cash expenditure in the financial year 2020 by approximately GBP 400 million. The company also reduced its operating costs and delayed restructuring and capital projects to tackle the impact of coronavirus pandemic. The group has decided to pause bonus payments and will not pay any Board level bonuses for the financial year 2019. The board will review bonus payment once financial impacts become clearer. The group has also decided to cancel the proposed final dividend payment for the financial year 2019 of 3.5 pence/share. The group has also paused the divestment process of Spirit Energy until commodity, and the financial market gets stable.

Share Price Performance

Daily Chart as of April 2^nd, 2020, after the market close (Source: Thomson Reuters)

Centrica Plc shares were trading at GBX 33.92 at the time of writing after the market close on 2^nd April 2020. Stock's 52 weeks High is GBX 115.00 and Low is GBX 30.55.

Conclusion
The company reported a decline in its financial performance in the fiscal year 2020. The company is focusing on growing customer relationships and delivering further efficiencies which could benefit in the growth of the company. Improved retail power margins in business energy supply in North America could improve the financials of the Group. The company is anticipating reduced losses in Home Solutions and Business Solutions segments which could benefit its business and financial performance. There are certain risks and uncertainties associated with the company’s business. Credit risk for financial assets and Liquidity risk management could affect the operations of the Group. Risk of political or regulatory intervention could affect the overall business of the Group. With the outbreak of Covid-19, many countries imposed restrictions on travel and resulted in a sharp fall in the stock markets globally. The company is still not able to quantify the impact on financial performance and been taking necessary measures to tackle the challenging period.

Based on the factors as highlighted above and uncertainties in near-term due to Covid-19 pandemic, we recommend investors to keep a “Watch” on the stock at the closing price of GBX 33.92 (as on 2^nd April 2020), with support from few catalysts needs to be evaluated at a later stage. 

McKay Securities Plc

McKay Securities Plc (LON: MCKS) is a UK based real estate investment trust engaged in the business of investment in the property and development and refurbishment of properties. The group’s portfolio includes 1000 Great West Road, The Mille, Portsoken House, 30 Lombard Street, Worple Road, Great Brighams Mead, Gatwick Road, Corinthian House, Switchback Office Park and Wimbledon Gate, etc.

The group will release its annual report in June 2020.

Trading Update
On 27^th February 2020, McKay Securities released an update for trading from 1^st October 2019 to 27^th February 2020. The total contracted rent increased by 5.5 per cent to GBP 28.3 million pa and on a like-for-like basis, driven by rent reviews and new lettings, the total contracted rent increased by 1.2 per cent to GBP 27.1 million pa for the year. The group’s completed and on-going projects for refurbishment at Staines, Folkestone, Croydon, Brentford and Crawley improved the rental values and portfolio reversion by 22.4 per cent to GBP 6.3 million. The group acquired a multi-let office building, Rivergate, in October 2019 and has fully integrated it into the portfolio. The group disposed of 30 Lombard Street, EC3 for sale price of GBP 76.5 million and completion of the sale is expected in the second quarter of FY2020. The company maintained a strong financial position with a drawn debt of GBP 194 million for the period. The group has substantial capital for investment after the completion of the disposal of Lombard Street.

Share Price Performance

Daily Chart as of April 2^nd, 2020, after the market close (Source: Thomson Reuters)

McKay Securities Plc shares were trading at GBX 190.00 at the time of writing after the market close on 2^nd April 2020. Stock's 52 weeks High is GBX 286.00 and Low is GBX 136.00.

Valuation Methodology

*Peers: Shaftesbury Plc, Unite Group Plc, Londonmetric Property Plc and British Land Company Plc.

Conclusion
The group witnessed an increase in the total contracted rent for the period. The group completed and on-going projects for refurbishment at multiple locations, which resulted in improved rental values and portfolio reversion significantly. The company maintained a strong financial position and have a substantial capital for investment. The Covid-19 pandemic will result in a delay in the expansion of the income-generating portfolio. With the increased level of unemployment will result in a delay in rental income. With the outbreak of Covid-19, many countries imposed restrictions on travel and resulted in a sharp fall in the stock markets globally.

Therefore, based on the above rationale and uncertainties in near-term due to Covid-19 pandemic, we have given a “Watch” recommendation at the closing price of GBX 190.00 (as on 2^nd April 2020), while we look for any upcoming catalysts in the near term.

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

Disclaimer

PLEASE BE ADVISED THAT YOUR CONTINUED USE OF THIS SITE OR THE INFORMATION PROVIDED HEREIN SHALL INDICATE YOUR CONSENT AND AGREEMENT TO THESE TERMS.
References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.
This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332.
The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine is not responsible for material posted on this website and does not guarantee the content, accuracy, or use of the content in this site. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated.
Kalkine do not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional licensed financial planner and adviser.